Oct 26, 2010

Condo Conversions may not have ruined Ohana Housing after all

Although it is widely perceived that investor speculation and abuse of the additional residential density allowed in Ohana Zones led the City to abandon the Ohana Unit program completely, these rumors were unsubstantiated in our research.

According to a Legislative Research Bureau study in 1988, the vast majority of Ohana Units were NOT developed into condominium units: "37 properties with ohana units have been made into condominium units under the Horizontal Property Regime. This figure is 5.3% of the total number of completed ohana units as of June 30, 1987." There were approx 798 total ohana units at that time; numbers vary depending on whether ohanas under construction are included in the total count.
The 1988 study concluded that there was no pressing need to address the speculation/CPR issue and furthermore, "...steps to control speculation are not easy to implement in a constitutional and equitable manner and at best will probably mitigate, rather than eliminate, the problem."

The LRB study does suggest that further follow-up research is recommended, especially with the Real Property Tax Office, to see if condo conversions would occur over the long-term. Also, there are unfortunate cases of people who bought detached Ohana Units that were converted into Condo Property Regime and are now not able to enlarge their Ohana home. We do not have quantitative data as to how many homes fall into this category.

My understanding is that the counties pressured the state legislature to change the state law to grant the counties discretion to control/direct urban growth. Thus the state law was changed from the counties must allow 2nd units on all residential land with adequate infrastructure, to "may" allow.