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Fall 1991 | Spring 1992 |
 President's Message - Don't Let it Happen Here (Evelyn Bender)Board HighlightsMembers AppreciatedLeasehold in HawaiiUpdate on Educational Revitalization (Libby Oshiyama & Marion Saunders)Time for Action - League Supports Gejdenson ProposalAppreciationState CouncilHealth Care ConsensusNational ConventionUrgent: Leasehold Conversion and Lease rent cap Legislation Needed (Richard Port)Mandatory Conversion Laws Covering Leasehold Projects (Bruce C. Dinman)Small Landowners' Perspective on Leasehold (James K. Mee)Legislature and the Elusive Leasehold Issue - 1991 (Virginia Isbell)Talk to LWVHI on Nov. 5, 1991 by Oswald Stender (Irene Coogan)Mandatory Conversion Could Benefit Lessors (Joan Hayes) |
Talk to LWVHI on Nov. 5, 1991 by Oswald Stender, Bishop Estate/Kamehameha Schools TrusteeDuring his tenure as a Campbell Estate Trustee, Stender reported that Campbell began to sell off it residential leasehold property because more income could be realized from commercial properties. Campbell chose to offer the property as a whole to the condo association rather than to individual apartment owners. Although this method may not have been as profitable to the Campbell Estate, it was easier to accomplish and allowed it to take advantage of the tax laws by swapping the residential leasehold land for similar commercial land. Campbell Estate does not have the same tax exemption on property sales as BE/KS, which is an eleemosynary trust. BE/KS has a total landholding of 338,000 acres, of this 900 acres, mostly on Oahu, contains 113 residential condominium projects with 14,000 units. While BE/KS had previously resisted selling these fee interests, it has now come to the same conclusion as several other large owners like Campbell, Damien, etc. that there is more economic gain and less emotional turmoil investing in commercial properties. The Sandalwood Condo, which received much publicity over the proposed large increase in lease rents was one of the first offered for sale. Prices, determined by a complicated formula based on what BE/KS considered fair market value, were not negotiable. Although the prices were felt to be very high, 97% of the owners opted to buy. Stender believed that the acceptance of the proposed fee increases, not only at Sandalwood but other projects, would have been less expensive for the owners than purchasing the fee. However, he realized that the owners chose the security of owning the land rather than face the uncertainty of what the fee increases might be when they came up again for renegotiation in ten years or so. BE/KS is willing to negotiate on an individual basis with those who cannot afford to buy the land or pay the increased lease rent. No one, he said, would be forced out of their condo. In Stender's opinion, selling the fee under the leasehold condominiums will add to the cost of housing in Hawaii. He feels that the residential leasehold, as we now know it, will probably be discontinued. Leasehold condos are already no longer an asset and their sales have slumped. Because of Hawaii's limited availability of land and its extremely high cost, residential leasehold, he said, "only defers the day of reckoning." As more leases continue to come up for renegotiation the problems will "only get worse." BE/KS will continue to market land for residential purposes but it will be sold as fee to developers. This, of course, win add to the cost which will be placed on to the buyer. Four developers on Oahu - Horita, Bedford, Mililani, and Gentry - are presently utilizing this method. BE/KS, which has resort residential leasehold on the big Island, will continue to move in this manner there. BE/KS will continue to oppose mandatory leasehold conversion because it feels no one should be forced to sell their land. Stender noted that small landowners face many different problems. Because of the great increases in the value of their land since it was purchased, state and federal capital gains taxes would eat up most of their profits if they sell. In addition, inheritance taxes would almost certainly force their heirs, unless they had large amounts of ready cash, to sell part of the land to pay these taxes. Rather than passing legislation for mandatory conversion or to prohibit future residential leasehold developments, Stender believes some adjustment in capital gains and inheritance taxes, as well as the passage of an anti-speculator tax, might be a better solution. Reported by Irene Coogan, |
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