The expiration of the state’s master lease on a Banyan Drive condominium has left both apartment owners and residential tenants in the lurch.
The expiration of the state’s master lease on a Banyan Drive condominium has left both apartment owners and residential tenants in the lurch.
The condominium owners’ association of the Country Club-Hawaii met Friday, at first in executive session with the building’s managing agent, and then with apartment owners, who are actually sub-leaseholders. Tenants, the public and the media were not allowed in the meeting.
The building’s master lease expired March 14. The Board of Land and Natural Resources in February approved a one-year holdover lease for the six-story building, which sits on state land, followed by a month-to-month revocable permit.
Robert Crudele, attorney for Herbert Arata, who held the master lease, said Thursday his client will not sign a holdover lease unless that lease can be assigned to the condo owners’ association.
“We’re in discussions with the Arata family about an assignment of that lease. And we’re going to have a direct conversation with DLNR about other options,” said Richard Emery, Associa Hawaii’s regional vice president and the building’s managing agent, after Friday’s meeting. “We believe there are options for the condominium association to have a direct relationship with DLNR without the Arata family being involved.”
Apartment association chairwoman Pearl Elena Macomber said afterward she is also optimistic for a solution.
“We are standing behind Richard,” she said.
There were sub-lessees, however, who expressed dissatisfaction after Friday’s meeting.
“In the meeting, I asked them, ‘Where do I stand? Am I a lessee or a tenant?’ And they couldn’t answer that straight out,” said Mary Shortt. “So I still don’t know where I stand. Do I own it still or am I a tenant?”
Shortt said she hasn’t paid condo maintenance fees for about eight months, citing her disagreement over funding front desk operations and housekeeping services for tenants with those fees.
Emery said building operations are still affected by a protracted court battle that pitted the Macomber board against another one, led by sub-lessee Carl Oguss, who claimed his group was the duly elected condo association. A court last year declared Macomber’s board the legal conductors of building business.
“We had some apartment owners who paid their maintenance fees to the Macomber board and some who paid to the Oguss board,” said Emery. “Those who provided receipts for payments to the Oguss board received credit for those payments. Some say they paid the Oguss board but haven’t given us proof of that. And some apartment owners refused to pay either board and a number continue not to pay their maintenance fees.”
All but two employees at the building have been terminated. Kevin Aoki, broker of Property Professionals, whose company handled rentals for the building, said hotel operations at the Country Club ceased on April 8. Aoki, the nephew of Arata and son of condo board member Sadao Aoki, also said “about two dozen” residential tenants have been given 45-day eviction notices. Those tenants have been ordered to vacate the building by June 23, Aoki said.
Emery said he couldn’t provide figures for delinquencies by apartment owners for maintenance fees or for accounts payable, but a delinquency status report obtained by the Tribune-Herald on April 22 indicates delinquencies of almost $1.6 million. A May 5 email from Emery to board members gave an approximate sum of $1.1 million in accounts receivable. That includes about $250,000 to Hawaii Electric Light Co., $150,000 for sewer fees, $600,000 for insurance premiums, $130,000 for current and projected attorney fees and $24,500 in lease rent to the state.
At least twice, HELCO has threatened to turn off the lights if payments are not made to the utility.
“We haven’t received any official notice (from HELCO) and the board today is working on a financial plan to make sure all its creditors are paid and any arrearages are paid over a reasonable payment period,” Emery said when asked if termination of power to the building is still a possibility.
“They (the board) actually adopted a budget at the beginning of this year that provided for cash flow to pay down delinquencies. But the major problem this association’s had from the beginning is that a significant number of owners don’t pay no matter what the fee is.”
Email John Burnett at jburnett@hawaii tribune-herald.com.