City & County of Honolulu

Bill aims to ease
lease conversions

Language to clarify
the city's lease-to-fee law
barely lands a quorum

By Gordon Y.K. Pang

The city's mandatory lease-to-fee conversion program designed to help condominium owners could be in trouble.

The City Council's Executive Matters Committee, made up of all nine members of the Council, was able to muster only a 5-0 vote to move out a bill expected to clear a legal cloud over a number of lease-to-fee cases in the wake of a Hawaii Supreme Court decision last month.

That ruling made it more difficult for leaseholders seeking to gain the fee interest to enlist the city's help.

Under the city's program, qualifying lessees can petition to have condemnation begin when a landowner either refuses to sell the fee interest or no purchase price can be negotiated. The city would condemn the land and turn over the fee interests to the eligible unit owners.

The court ruled that the language in the ordinance requires no conversion action can begin unless a minimum of either 25 owner-occupants or 50 percent of the owners of all units in a project agree to the action.

The city, for years, had contended the law means either 25 owner-occupants or 50 percent of owner-occupants -- usually a lesser requirement.

The bill now going through the Council seeks to clarify that language to mean leaseholders can approach the Council once 50 percent of owner-occupants want to buy the fee under their units.

Executive Matters Chairman John Henry Felix, who introduced the bill, said he is "cautiously optimistic" it will be approved by the Council.

But Felix had to call a recess in the middle of the meeting due to lack of a quorum, and then had to ask Councilwoman Darrlyn Bunda, who has not supported the bill, from her office to rejoin the meeting to move the measure out. That action does not bode well for the bill, said Councilman Steve Holmes.

"It looks like it's in big trouble," Holmes said.

Felix, Holmes and Bunda were joined by Duke Bainum and Gary Okino in moving the bill out of committee. Members Romy Cachola, John DeSoto, Ann Kobayashi and Jon Yoshimura were not in attendance when the vote was taken at midafternoon yesterday.

Felix said at yesterday's meeting that the intent was always to have 50 percent of owner-occupants as the minimum trigger for a conversion action.

"We would be closing the door on too many lease-fee conversions (otherwise)," he said.

More than 30 people testified yesterday -- both for and against the clarifying language.

Supporters of the bill said the Council had always intended the leasehold conversion program to apply to as many families as possible.

But members of the Small Landowners Association of Hawaii said the city should not be forcing them to sell their property.

City & County of Honolulu

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