City & County of Honolulu

Leasehold conversion
is on hold

The Council will defer action
on the bill that clarifies the
city's condemnation power

By Gordon Y.K. Pang

The future of the city's leasehold conversion program may be on hold because of lack of support for Bill 53.

The City Council's Executive Matters Committee intends to defer action on the controversial bill.

Bill 53 aims to revise the minimum number of leasehold condominium owners needed to invoke the city's condemnation powers that force landowners to sell their fee interests.

John Henry Felix, committee chairman, this morning announced that the committee would defer action on the bill. His announcement touched off loud and angry protest from opponents, who demanded that the committee kill the bill immediately.

The committee then announced it plans to first listen to testimony by more than 100 people who signed up for the hearing today.

The City Council was considering the bill because of a ruling by the Hawaii Supreme Court in May that the city was misinterpreting its leasehold conversion ordinance. Since the program became law more than five years ago, the city has accepted applications from either 25 owner-occupants or 50 percent of owner-occupied units. The court said the city misinterpreted its own law and should have considered only petitions with 25 owner-occupants or 50 percent of all units in a complex, not just owner-occupied units.

The ruling disqualified about 326 of about 363 leasehold projects with occupant lessees, allowing only 37 to qualify, according to Michael Pang of Monarch Properties, a company specializing in representing lessees.

Bill 53 allows 50 percent of owner-occupants to start the leasehold conversion process. But a compromise amendment, introduced last week by Felix on City Councilman Gary Okino's behalf, would create a 10-owner-occupant minimum.

That would exclude about 250 of the 363 Oahu leasehold condominium projects, but only about 1,200 of the roughly 5,700 occupant lessees, Pang said.

Okino, who has up until now voted with the majority, caused a stir among his colleagues and stakeholders in the debate yesterday when he asked fellow Council members to consider allowing the 50 percent threshold only on projects developed after Dec. 31, 1991. Okino, in a memorandum to his colleagues, said the city's initial lease-to-fee ordinance became effective on Jan. 1, 1992.

"Landowners who developed before 12/31/91 ... had no way of knowing that lease-to-fee conversion may become a lessee's option," he said.

But last night, Okino said he no longer was in favor of that plan.

Proponents and opponents of Bill 53 also said they did not like Okino's plan.

Jane Sugimura, president of the Hawaii Council of Associations of Apartment Owners, said Okino is forgetting about the "social injustice" experienced by lessees forced to pay much higher renegotiated rents, purchase fees at exorbitant prices or risk being removed from their homes.

Robert Ozaki, administrator for the Queen Liliuokalani Trust, said: "The proposed amendment does not go far enough" in helping landowners. Ozaki suggested that the issue be deferred until a new Council is elected and convenes the first week of January.

The trust has been fighting a condemnation action against it from eight of 14 owner-occupants in Foster Tower, a 141-unit condominium in Waikiki.

City & County of Honolulu

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