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Friday, June 30, 2000

Maui Council seeks
solution to huge leasehold
rent hikes on condos

By Gary T. Kubota


LAHAINA -- Wally Working fears he'll lose his home as the leasehold rent for land beneath his condominium increases.

Working, 74 and a retired businessman, said he's already seen a married couple go bankrupt and lose their condominium unit.

Along the Maui coast in a number of resort communities, residents who bought condominiums on leasehold land are finding their financial footing becoming tenuous.

Most of the leasehold units on Maui, built in the last 35 years and located within walking distance of the ocean, are used as long-term or vacation rentals.

But a fourth -- 750 of 2,900 leasehold condo units in the county -- are occupied by homeowners, according to the Maui tax office.

Many of these homeowners, especially retirees, are facing the likelihood of land rent increases several times the original rental.

Some unit lease rents that have been under $100 a month have jumped to more than $1,000 monthly.

The West Maui Taxpayers Association is leading a drive to have county lawmakers enact an ordinance similar to a Honolulu law that enables condominium homeowners to buy their individual share of the leased land.

No bill has been introduced, although the county Council staff is reviewing the issue.

Association President Joseph Pluta said the intent is to force owners of leased land to negotiate fairly or to sell their land.

"It compels them to negotiate," Pluta said.

Some landowners say such a law has no place in Maui County.

William Crockett, a land attorney whose family owns the property under the Milowai Condominium in Maalaea, said the situation on Maui is different from that in Honolulu.

He said most of those owning leasehold condominium units on Maui are investors.

"That's a very big difference," he said.

Crockett said to force the sale of the land would give people an unfair windfall profit.

Pluta said enacting an ordinance would help to correct the problem of having so many leasehold residential condos on Maui.

"It doesn't exist in 99 percent of the United States," Pluta said. "It's a scary thing. I think it's really ruining people's lives."

Maui Council Vice Chairman Dain Kane said while he's still studying the issue, he fears a proposed ordinance could adversely affect many small investors and families who own the land under condominiums on Maui.

Kane said on Oahu, a few large landowners own most of the leased land.

Kane said he would be hesitant to pass a law forcing small landowners to sell their property.

"I have some philosophical problems with that," Kane said.

Pluta said an ordinance would enable condo owners to pay a fair price for the land.

"There are no poor landowners," he said. "These guys are making a fortune and they just want to make more and that's not right and that's not in the public interest."

At Alaeloa Residential Condominium where Working lives, his land rent has increased from about $70 to more than $1,600 a month since 1990.

He also pays $650 a month in maintenance fees.

Working said when he bought the condominium in 1989, he paid $325,000 and spent $100,000 remodeling it.

Working said the lease ends in 23 years, and he fears the value of his condominium will go down significantly as the land rent rises.

He said banks are also hesitant to loan money to homeowners as a land lease nears its end.

"If we can't afford this, what the heck do you do? Go bankrupt," he said. "I just don't think it's fair."

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