Leasehold owners face tough decision

At the tail end of the leasehold era, the sleeping dragon has begun to rouse, bringing to light old problems with limited solutions for both lessees and fee owners.

Property records show that some 1,500 or so lessees and lessors on Oahu will face critical decisions in the next decade as the terms of their leases begin expiring in 2010. Leasehold owners at the Kailuan are the first set of owners to be in the throes of an 11th-hour decision about whether to stay or to go. To be fair, the situation also has forced Kaneohe Ranch, the fee owner of this property, to make a grueling decision that has long-term ramifications.

While the Kailuan represents only 18 of the 1,500 or so leases on Oahu that will expire in the next decade, for now it has taken over the dubious honor of becoming the next poster child for Hawaii's leasehold system.

Experts have said that finding a new business model for a decades-old contract that actually works in modern times is easier said than done.

If lessees decide to go, they know that they'll have trouble finding another home at an affordable price. But, if they stay, they know that their problems could double. On the flip side, fee owners who take back their lease at the term's end have the unhappy task of terminating long-term relationships with lessees and risking public censure. It's not an easy task either, for those that decide to renegotiate the lease or offer the fee.

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