Opinion ID: 2521501
Heading Depth: 2
Heading Rank: 2

Heading: Applicability of ROH Chapter 38

Text: The Fee Owners argue that ROH chapter 38 does not apply to them because the Ordinance only applies to CPRs to which the fee simple interest in land has been submitted. The circuit court ruled that the Fee Owners' leased fee interests were subject to condemnation because ROH chapter 38 applied `to all lands ... on which are situated [] residential condominium property regime projects created under HRS Chapter 514A'.... R.O.H. § 38-1.3. The ICA concluded that the Ordinance authorized condemnation of residential condominium land so long as no less than 50% of the condominium unit owners applied to the City for condemnation. Kau I, at , at 498, 92 P.3d at 1008, 2001 WL 1205618. The ICA further concluded that the land condemned must be residential condominium land at the time of acquisition, but that HRS § 514A-21 does not require the development to maintain such status after condemnation occurs. Kau I, at , n. 9, at 499-500, n. 9, 92 P.3d at 1009-1010, n. 9, 2001 WL 1205618. We disagree with the Fee Owners' argument that ROH chapter 38 is inapplicable to them because the Ordinance only applies to projects whose declaration includes the fee simple interest in the land. The Property is subject to condemnation under ROH chapter 38 for three reasons. First, the plain language of the Ordinance supports the application of ROH chapter 38 to the Property. Second, the Fee Owners' argument that land refers to the fee interest in the land is not supported in the applicable ordinance. Third, the public purpose requirement underlying ROH chapter 38 condemnation is satisfied as a matter of law.
This court has stated that [o]ur statutory construction is guided by established rules: When construing a statute, our foremost obligation is to ascertain and give effect to the intention of the legislature, which is to be obtained primarily from the language contained in the statute itself. And we must read statutory language in the context of the entire statute and construe it in a manner consistent with its purpose. When there is doubt, doubleness of meaning, or indistinctiveness or uncertainty of an expression used in a statute, an ambiguity exists.... Coon at 245, 47 P.3d at 360. Three articles in ROH chapter 38 are applicable in the present case: article 1, entitled General Provisions; article 2, entitled Condemnation of Condominium Development Leaseholds; and article 5, entitled Eminent Domain. The Property is subject to condemnation under all three articles. Article 1, § 38-1.3 provides that chapter 38 applies to all lands[] in the City and County of Honolulu on which are situated [] residential condominium property regime projects created under HRS Chapter 514A.... The Property meets all of these requirements: it is within the City and County of Honolulu, it is residential, [7] and it was created under HRS chapter 514A. [8] Article 2, § 38-2.1 provides that CPR condemnation applies to developments that, at the time of acquisition by the City, are developed into CPRs or occupied by residential lessees under leases of condominium conveyance documents executed before the effective date of this chapter. The present Property meets both of these requirements. The effective date of chapter 38 is January 1, 1992 (Ord.91-95), and the conveyance documents were executed before that date, so the Property is presently subject to condemnation. Article 5, § 38-5.1 provides that eminent domain applies to developments which are created by condominium property regimes under HRS Chapter 514A.... The Property meets this requirement. See supra note 8. Thus, the Property is subject to condemnation under ROH chapter 38 under the plain language of the Ordinance.
The Fee Owners argue that the ICA gravely erred because it did not read ROH §§ 38-1.2 [9] and 2.1 [10] within the context of the entire Ordinance; they contend that, when read in context, condemnation is appropriate only if the fee simple interest in the land was submitted to the CPR. The basis of the Fee Owners' argument is that the term land, as used in ROH chapter 38, refers to the fee simple interest in the land. This argument, however, is not supported by the Ordinance. A plain reading of ROH § 38-2.1 does not lend support to the Fee Owners' argument. This section does not contain the word land and does not make a distinction between fee simple or leasehold property. The only requirement in ROH § 38-2.1 is that the CPR be developed or partially developed at the time the City acquires it through condemnation. Because the Property is presently held as a CPR, it is subject to condemnation under ROH chapter 38. Furthermore, the Ordinance does not provide a definition of the term land; rather, the Ordinance uses the term interest when referring specifically to an interest in the land as opposed to the physical attributes of the land. [11] Therefore, the Fee Owners' argument that the word land is synonymous with the fee simple interest in the land is not supported by the plain language of the Ordinance. Thus, ROH chapter 38 applies to all land submitted to a CPR, regardless of the type of interest in the land submitted (whether fee simple or leasehold).
The Fee Owners argue that, even if ROH chapter 38 is otherwise applicable to them, condemnation of the Property will not satisfy the public purpose requirement underlying ROH chapter 28 because the Lessees would be tenants in common upon expiration of the Master Lease rather than fee simple condominium unit owners as envisioned in ROH chapter 38. We disagree and hold that the public purpose requirement underlying ROH chapter 38 condemnation is satisfied as a matter as law, as will now be discussed.
ROH chapter 38 (entitled Residential Condominium, Cooperative Housing and Residential Planned Development Leasehold Conversions), enacted by City and County of Honolulu Ordinance 91-95 (1995), is modeled after HRS chapter 516 (known as the Hawai'i Land Reform Act (HLRA)). Richardson v. City and County of Honolulu, 802 F.Supp. 326, 340 (D.Haw.1992); see generally, Richardson v. City and County of Honolulu, 76 Hawai'i 46, 868 P.2d 1193 (1994) (outlining Hawai`i's involuntary fee conversion scheme under state statute and county ordinance and stating that both HRS chapter 516 (HLRA) and ordinance 91-95 (presently codified as ROH chapter 38) appertain to involuntary fee conversion; however, the statute and ordinance cover different subject matterthe HLRA applies to land underlying single family homes and ROH chapter 38 applies to condominium, cooperative housing and planned development units.) The intended similarity between ROH chapter 38 and the HLRA is evident in the City Council's statement regarding the purpose of the Ordinance: [t]he purpose of this measure is to provide to the leasehold owners of condominium properties the same right to purchase the land under their homes as is currently provided the owners of single family dwellings.... See Coon, 98 Hawai'i at 251 n. 27, 47 P.3d at 366 n. 27 (citing the report of the City Council Committee on Housing, Committee Report No. 545 (1991)). In enacting ROH chapter 38, the City Council determined that there was a serious shortage of fee simple residential condominium land, which resulted in artificial inflation in the value of such land on O'ahu and increasing lease rents, with many owner-occupants of leasehold residential condominium units unable to afford to continue living in their homes. Id. at 249, 47 P.3d at 364; see also Hous. Fin. and Dev. Corp. v. Castle, 79 Hawai`i 64, 898 P.2d 576 (1995) [hereinafter, HFDC ] (providing a detailed explication of the public purpose underlying the HLRA). In order to alleviate these perceived undesirable economic and social conditions, the City Council deemed it necessary to enact ROH chapter 38 to provide a right to leasehold owners of residential condominium units to purchase at a fair and reasonable price a proportionate share of the fee simple title to the land upon which their condominium units are situated. Coon, 98 Hawai'i at 249, 47 P.3d at 364. Consistent with the stated purpose of ROH chapter 38, the threshold requirement and mechanism for the conversion of condominium owners' leased fee interests into fee simple interests are similar to those of the HLRA. Id. at 251 n. 27, 47 P.3d at 366 n. 27.
In Richardson v. City and County of Honolulu, 124 F.3d 1150 (1997), the United States Court of Appeals for the Ninth Circuit held that Ordinance 91-95 (codified as ROH chapter 38) is constitutional: [i]n summary, we hold that Ordinance 91-95 (the lease to fee ordinance) is constitutional. The Ordinance admittedly takes private property, but it does so for a sufficiently public purpose and no constitutional deprivation has as yet been established. Richardson, 124 F.3d at 1166. Similarly, we previously held in HFDC that the HLRA accomplished a public purpose within the meaning of the HLRA and the United States and Hawai'i Constitutions. HFDC, 79 Hawai'i at 90, 898 P.2d at 602. After reviewing the public purpose elucidated in the express language of the HLRA, its legislative history, and earlier case law, we held that the HLRA continues to accomplish a public purpose within the meaning of the HLRA and the United State and Hawai'i Constitutions. Id. at 91-92, 898 P.2d at 603-04. In reaching this conclusion, we discussed the legislative findings and stated purpose of the HLRA and held as follows: We therefore hold that once the legislature has spoken on the social issue involved, so long as the exercise of the eminent domain power is rationally related to the objective sought, the legislative public use declaration should be upheld unless it is palpably without reasonable foundation. The crucial inquiry is whether the legislature might reasonably ... have believed that application of the sovereign's condemnation powers would accomplish the public use goal. The [Hawai'i] Legislature, in comprehensive findings, determined that skewed patterns of land ownership have interfered with the normal functioning of the state's residential land market and declared that condemnation of certain concentrated private property interests would serve a public use by correcting the perceived social and economic evils of a land oligopoly. Clearly, the legislature reasonably could have believed that condemnation and resale of the fee interest in leasehold land would promote the objectives of increasing the availability of residential property, realigning the residential fee simple market, reducing land prices, and would beneficially impact the state economy and general public welfare. These are legitimate public purposes. The employment of the state's eminent domain authority to redistribute fees simple to correct socio-economic problems attributed by the legislature to a land oligopoly is a rational means to accomplish these ends. Id. at 85, 898 P.2d at 597 (alteration in original). c. The DCS's determination that the acquisition of the Fee Owners' leased fee interests, using the City's power of eminent domain, would effectuate the public purpose of ROH chapter 38, as stated by the City Council in its enactment, satisfies the public purpose requirement underlying ROH chapter 38 condemnation as a matter of law. The Fee Owners contend that condemnation would not in fact accomplish the City Council's articulated public purpose of fee simple condominium ownership because, according to the Fee Owners, the Lessees will be tenants in common upon expiration of the Master Lease in 2014. We need not decide now what the legal ownership status of the parties will be upon expiration of the Master Lease, a contingent event; whatever their status may be upon the occurrence of a contingent event is not determinative of whether the Lessees have satisfied the public purpose requirement underlying ROH chapter 38. We previously decided this issue in HFDC, where the fee owners proposed that public purpose determinations be made on a case-by-case basis as a function of the particular time and general economic circumstances at the time of condemnation. Id. at 87, 898 P.2d at 599. We held that the fee owners in that case were mistaken and that the public purpose requirement of the HLRA would be satisfied as a matter of law by the lessees' compliance with its threshold requirements of the number and qualifications of applying lessees and the condemning authority's determination that its acquisition will effectuate the public purpose of the HLRA: Put more succinctly, pursuant to HRS § 516-22, the HFDC's sole function is to determine that the necessary quantum of lessees have applied for purchase of their leased fee interests in residential lots situated in a qualifying development tract, see HRS § 516-1, supra note 1, in conformity with the preconditions enumerated in HRS § 516-33, and that the acquisition by the HFDC will effectuate the public purposes of the HLRA. .... These determinations of the number and qualifications of applying lessees and the effectuation of the public purposes of the HLRAwhich are all that are required of the HFDC by HRS § 516-22are a far cry from a reexamination of the question whether any given acquisition would in fact accomplish the legislature's articulated public purposes, a feat that the United States Supreme Court ruled that even the legislature was not required to accomplish in the first instance. [ Hawai'i Housing Authority v. ] Midkiff, 467 U.S. [229] at 242, 104 S.Ct. [2321] at 2330 [81 L.Ed.2d 186 (1984)]. Id. at 88-89, 898 P.2d at 600-01. In this case, the Fee Owners have not challenged the DCS's findings that the requisite number of applications were received from qualified owner occupants and that the public hearing was properly noticed and held. Their sole challenge is to the DCS's finding that acquisition of the leased fee interest in the Property using the power of eminent domain of the City will effectuate the public purpose of ROH chapter 38 as stated by the City Council in Ordinance 91-95. Considering both the history of ROH chapter 38 and its close relationship with the HLRA and our holding in HFDC, we have no difficulty in holding that the public purpose requirement underlying ROH chapter 38 condemnation has been satisfied as a matter of law in this case. The bottom line is that the ICA did not gravely err when it concluded that the Property was subject to condemnation under ROH chapter 38.