City lease-to-fee
conversion law
upheld on appeal

Condo owners greet a ‘milestone,’
but Bishop Estate may appeal again

By Mary Adamski

A city ordinance that could force Oahu property owners to sell leasehold land under condominiums serves the public by strengthening the economy and stimulating stalled real estate sales, according to a court ruling yesterday.

The ruling by the U.S. 9th Circuit Court of Appeals affirmed 1992 Honolulu federal court decisions on the law, which provides for city intervention in lease sales through the land condemnation process.

It may be appealed to the U.S. Supreme Court by Bishop Estate, landowner of more than 5,000 of the 30,000 leasehold condominiums on Oahu.

Estate spokeswoman Elisa Yadao said officials of the state's largest private landowner are "digesting the decision and assessing the options available."

The ruling comes 22 months after a three-judge panel heard arguments in the case.

Advocates for lessees said the law will force landowners to justify their price tags for land in court, in contrast to lease sales, which have been set as much as four times market value.

"I'm ecstatic," said Councilman John Henry Felix, author of the 1991 ordinance, which was based on a 1967 state law. The U.S. Supreme Court upheld the Hawaii Land Reform Act, which provides for mandatory sale of lease land under single-family housing units. Thousands of houses have been sold to residents under the mandatory lease-to-fee conversion law.

"I call upon Bishop Estate and others to cease their efforts to delay implementation of the law through legal challenges. Now is the time for Bishop Estate to negotiate in good faith with the citizens of Oahu," Felix said.

Robert Clark, president of a condominium owners' advocacy group, called the ruling a "marvelous milestone for us." But, he said, the first residents who attempt to implement the law face a costly clash with the big landowner, and his group wants to help pay attorney and property assessor fees with donations from condo owners throughout the island.

"If we just got a small contribution from each of the 30,000 lessees out there, we would have enough to get Kuapa Isle through," said Clark, president of the HOBO (Homeowners Oppressed by the Bishop-Savio Organization) Alliance. The title refers to Realtor Peter Savio, who packages and promotes lease sales for Bishop Estate. "If Kuapa Isle wins, we all win."

Some 50 residents of the Kuapa Isle condominium in Hawaii Kai were the first to ready a petition to force Bishop Estate to implement the law, but the City Council sidelined their effort in March 1996.

"The Council stopped us for a nonreason, influenced by the Bishop Estate," said former coalition president Don Madden. "At that point, the law had been upheld at every turn. They voted to wait out the court appeal."

Felix said he will introduce a new Kuapa Isle resolution. Under the process, the city Department of Housing and Community Development could take the matter to court through eminent-domain process if the landowner and residents fail to reach a "a happy meeting ground."

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