ALLISON SCHAEFERS / ASCHAEFERS@STARBULLETIN.COM James Severson helped a neighbor move yesterday at the Kailluan cooperative, where an expired ground lease has forced them to leave.

Kailuan dispute comes to quiet end

Residents moved out yesterday after the state Supreme Court refused to intervene

Former lessees at the Kailuan cooperative yesterday became the first multi-family tenants in the state to be evicted at the end of their ground lease term, after a last-minute attempt to get the state's highest court to intervene failed.

While the Kailuan represents only 18 residential units, some 1,500 others on Oahu will face similar situations with expiring ground leases in the next decade.

The Kailuan's cooperative owners dealt with the possibility of eviction in a variety of ways. Some sold their properties and others accepted moving assistance from Kaneohe Ranch in exchange for leaving before the lease ended.

The remaining half dozen or so leaseholders stayed in the hope that they could use the courts to force Kaneohe Ranch to sell the land -- an approach that came to an unsuccessful end Thursday before the Hawaii Supreme Court. By yesterday, most of these homeowners still had not found permanent housing.

ALLISON SCHAEFERS / ASCHAEFERS@STARBULLETIN.COM Vishaka Devi Jokiel checked her mail one last time yesterday before being ordered off the grounds of the Kailuan cooperative, where she has lived since 2004. The ground lease on the property has expired, and residents' attempts to force the landowner to sell to them failed.

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It was a quiet end to a controversial issue yesterday as former members of the Kailuan residential cooperative packed up belongings and surrendered their homes to Kaneohe Ranch, owner of the building's ground lease.

A metal chain blocked entry into the building parking lot and a few security guards hired by Kaneohe Ranch supervised as former building leaseholders carried out suitcases and clothes, checked mail and gathered pets. Some leaseholders were denied entry.

On Thursday, the Hawaii Supreme Court denied a petition from residents of the Kailuan to intervene in their court-ordered eviction. The decision made these lessees the first multi-family tenants in the state to be evicted at the end of their lease term. The owners of more than 1,500 leasehold units across the state could face a similar situation in the next decade.

"It's the end of the road for us as far as staying here," said James Severson, who had lived at the Kailuan since purchasing a leasehold unit in the cooperative for $59,000 in 1986.

Severson, wearing a shirt chastising Kaneohe Ranch for refusing to sell to lessees, said he was the first buyer to purchase a unit in the building, which was developed as affordable housing.

"This is very difficult. I don't know that it's sunk in yet," said Severson, who has temporarily moved in with his parents. "We've lost our home, our investment and everything that we've worked for."

The Kailuan opened as a leasehold rental apartment complex in 1959 on land that Kaneohe Ranch says that it didn't plan to sell. Developer Peter Savio later bought the building, and turned it into a cooperative in 1985.

Members of the Kailuan Inc., whose ground lease expired Dec. 31, could still appeal to the state's highest court; however the latest ruling prevents them from ever returning to the place that they once called home, said attorney Gerard A. Jervis, who represented members of the Kailuan Inc. pro bono.

"Now that they are out of there, they won't be able to go back," Jervis said. "The Hawaii Supreme Court is just wrong on this issue. The system is flawed."

Jervis had argued that Kaneohe Ranch's decision not to sell the fee to the Kailuan Inc. violated a state statute that required land owners to give leaseholders the right of first refusal if they planned to sell the property. However Hawaii Circuit Court Judge Glenn Kim did not support his position. Last month, Kim ordered the cooperative to surrender their homes and to bring the property into compliance with federal environmental laws by closing cesspools.

Since then, Hawaii lawmakers have begun considering Senate Bill 3196, a bill which seeks to amend the state's current "Right of First Refusal" law, HRS 514-C2. The amendment would come too late to change the outcome at the Kailuan, Jervis said.

Now that the few remaining occupants have left the Kailuan, Kaneohe Ranch will begin to close the nine now-illegal cesspools on the property, said Rosemary Fazio, Kaneohe Ranch's attorney.

Closure is not as easy for Kaneohe Ranch's former lessees, who are struggling to find their places in Honolulu's notoriously high-priced real estate market.

While 12 out of the 18 owners at the Kailuan bought after 2000 in full knowledge that there weren't many years left on their leases, most expected that they would one day be able to buy the fee. The conversion of some two-thirds of leasehold inventory had given them false confidence, they said.

Vishaka Jokiel, a single-mother who has lived at the Kailuan since 2004, said she has found temporary housing in Waimanalo. Cost has prevented Jokiel, who paid $20,000 for her unit in the Kailuan, from finding a permanent home, she said, adding that other former leaseholders have had equal difficulty.

In addition to worrying abut their own relocation, former leaseholders are concerned for their former neighbor Sara Way, who is wheelchair bound and was hospitalized before she could find alternate housing.

"She was out in the rain passing out Save the Kailuan flyers two days before she got sick," Jokiel said. "I think all of this has been too much for her."

Kaneohe Ranch said that it tried to assist Way in moving and finding alternate housing on at least three separate occasions, but that their attempts were blocked by Jervis.

"The process has been a challenging one for all concerned. Kaneohe Ranch, however, has continually worked to help ease the situation," Fazio said. "Relocation assistance was offered to tenants including services from real estate brokers and non-profits, as well as financial assistance of up to $10,000 per apartment. Several of the tenants accepted the offer."