Talks should beat
condemnation axThe issue: The City Council
has voted to condemn Waikiki
parcels for renovation.CONDEMNATION is a tool of last resort in advancing the public good, and the city should use every means to avoid using it. The City Council's decision to exercise that power should be enough for Outrigger Enterprises to reach a compromise with four landowners so it can proceed with plans to renovate and replace old buildings on eight acres in Waikiki.
Although the Council has approved a measure to begin condemnation proceedings, David Arakawa, the city's corporation counsel, says he will refrain from going forward with the process while negotiations are ongoing. Outrigger and the landowners should not test his patience.
The area approved for condemnation amounts to about 7 percent of the area planned for redevelopment, and most of it has been leased to Outrigger since 1954. Those leases give the landowners veto power over the redevelopment. Outrigger says that when it tried to purchase the land, the owners demanded two to three times the fair market value. It says fair market value of the four parcels ranges from $1.2 million to $3.5 million.
Conflicts inherent with leasehold land caused Michael Sullivan of HVS Capital Corp., a financing and investment banking consultant, to assess Outrigger's $300 million project as entailing "an unacceptable level of lending risk."
Since the City Council began considering the Outrigger condemnation proposal, the owner of the second-largest of five parcels agreed to sell, but negotiations are continuing with the remaining four landowners. Some of the landowners have claimed sentimental attachment to the land, which is essentially investment property with rental income from Outrigger.
Although courts have allowed condemnation for private use as long as it serves the public welfare, governments are rightly reluctant to use that power. However, Hawaii's peculiar distribution of land ownership and leasehold agreements have justified the use of condemnation for transfer of land from lessors to lessees. That was the essence of the Hawaii Land Reform Act of 1984, which forced the Bishop Estate to offer land for sale to lessees.
Opponents of the condemnation measure argued that it gives Outrigger an unfair advantage over the landowners. Previously, Outrigger's need to acquire the parcels in order to go forward with its project gave landowners a leg up.
Governor Cayetano's proposal that the Legislature strip the city of the power to condemn property for private use may bring balance to the bargaining table. However, the proposal should be rejected because it could hinder the City Council's flexibility to serve the public good in future situations.
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Paying more may prod
smokers to quitThe issue: State lawmakers
may increase the tax on cigarettes
to $1.20 per pack.A penny per cigarette may not be enough of a price increase to spur smokers to kick the habit, but it could add as much as $8 million to lean state coffers. As such, state lawmakers should give their approval to a measure that would raise to 6 cents the tax on tobacco products.
The increase is modest. An earlier draft of the bill would have doubled the present 5-cent per cigarette tax, but some legislators balked, echoing arguments by the tobacco industry that it would have placed too much of burden on one group of people. The original measure proposed an annual allocation of $5 million of the revenue generated to the tobacco trust fund for anti-smoking programs. The revised plan, with lower projections of revenue, would send all the money to the state general fund.
Twenty-two other states that like Hawaii are struggling to make budgetary ends meet are weighing tax increases on tobacco products, which has the industry fuming. "We characterize what's going on as tax profiling," said John Singleton, spokesman for R.J. Reynolds Tobacco Co. "You're taking a small percentage of the population and singling them out for an additional tax burden that ultimately benefits the entire state."
True, but as the bill's proponents point out, smokers should bear some responsibility; lighting up costs about $97 billion a year in health care and job productivity nationwide. The American Medical Association advocates higher taxes as a way to discourage smoking and health officials attribute the decrease in the adult smoking rate in the past decade to a combination of high taxes, no-smoking laws and public education campaigns.
More than 27 percent of high school students in Hawaii smoke, while the percentage among adults is 18.7 percent. Close to 90 percent of adult smokers started puffing as teen-agers and, although most would like to quit, only one in 50 are successful. If price can be a deterrent to young people, particularly adolescents who have less money to spend, the bill may prove to be especially beneficial.
If the bill is passed, Hawaii's $1-per-pack tobacco tax -- now among the highest in the nation -- would go up by 20 cents. Illinois is considering a boost of 75 cents, which would bring its state taxes to $1.33 a pack. In New York City, combined state and city tax increases would cost a smoker close to $7 a pack.
Under normal circumstances, few would want to add to Hawaii's image as a tax hell. In this case, however, lawmakers may want to consider setting an even higher tariff. Although the bill's purpose is primarily to raise revenue, it may lead to smokers quitting or at least cutting down.
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Published by Oahu Publications Inc., a subsidiary of Black Press.Don Kendall, Publisher
Frank Bridgewater, managing editor 529-4791; fbridgewater@starbulletin.com
Michael Rovner, assistant managing editor 529-4768; mrovner@starbulletin.com
Lucy Young-Oda, assistant managing editor 529-4762; lyoungoda@starbulletin.comJohn Flanagan, contributing editor 294-3533; jflanagan@starbulletin.com
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