[ OUR OPINION ]
THE City Council's approval this week of lease-to-fee conversions of three condominium buildings isn't the final word on the contentious issue. Left unresolved by the body, most of whose members are at the end of their terms, are measures to correct flaws in the ordinance that controls the process by which such properties change hands. Lease-conversion
grievances may
exceed city’s reach
THE ISSUE The Honolulu City Council approves the request of owners at three condominiums to purchase land in fee.
The courts have upheld leasehold conversion as a worthy public purpose and lessees have expected that they would have the opportunity to buy their fees. However, landowners -- many of whom hold small parcels and some of whom provide charitable services -- contend that they, too, serve a public purpose.
The recent conflict about conversions originated when the Hawaii Supreme Court pointed to a mistake in the wording of the ordinance. The intent was to allow conversions if either 25 owner-occupants or 50 percent of owner-occupied units sought them. However, the court ruled that, as worded, the ordinance required that 50 percent of all unit owners, regardless of whether they lived in the condominiums, were required to initiate conversion.
The ruling gave landowners an opening to argue whether public purpose was best being served, as was the intent of the Hawaii Land Reform Act of 1967 on which the ordinance is predicated. The act allowed lessees of free-standing homes to acquire the land under their homes in the belief that home ownership is good public policy. It was aimed at powerful land trusts, such as the then-Bishop Estate, which had been seen as an institution that enriched its officials while lagging in its mission to educate Hawaiian children.
Although the estate -- now called Kamehameha Schools to reflect its shift toward its obligation to education -- was forced to sell some of its vast land holdings, it retains property where leased condominiums stand, as do other trusts and landowners, large and small. Some, such as the First United Methodist Church, use lease income to provide worthwhile social services, such as food banks and preschools. The nonprofit Queen Liliuokalani Trust, which owns a Waikiki building, funds more than 300 social programs in part from revenues derived from lease interest fees.
Many condominium owners, particularly older people, may suffer hardship if fees are raised when their leases expire; many want the security of owning their homes in full. Others stand to profit in selling their units after conversion, as did many homeowners during the 1980s. Because there is no mechanism to discourage this, conversion in the name of public good loses some luster.
The Council has deferred action on fixing the flawed ordinance partly because of emotional pleas from landowners and Hawaiian trusts, who view land as valuable not only in terms of monetary worth, but as their legacy. That is difficult to dispute; however, the law and court judgments support the lessees' position. Both sides have profound arguments and it is unclear how a satisfactory compromise could be reached.
Some have argued to the Council that the Land Reform Act has outlived its goal. If that is their belief, they may do better to shift their efforts toward revision of the act because it is the groundwork for the city's ordinance. However, the Council properly observes that the law stands and, as guardians of public policy, must move ahead on legitimate leasehold conversions.
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