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President's Notes (Diane Hastert)
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Bring to May Units or Mail In (Vida Fassler)

International Relations and Trade

Malaekahana Homeowners Association: Foreign Investment--A Case in Point (Testimony given to Senator Dan Inouye).

"The homeowners of this particular section of property located in Kahuku, on the island of Oahu, welcome the opportunity to testify before this committee because our group of homeowners has had first-hand experience with foreign capital, because the capital in question does not have its source in Japan, because we have no particular bias about foreign capital per se. and because out of our own experience, we believe that there should be a congressional investigation into the sometimes detrimental effects that foreign capital has on the communities it infiltrates, such as ours.

Our group of homeowners will, in 1975. become sublessees of United Kingdom corporation doing business as Grosvenor/Jardine Inc. The major reason why we have been hurt by this foreign corporation is due to the total insensitivity that this corporation has displayed for our local customs and traditions.

Malaekahana Bay is unspoiled, and certainly is one of the most beautiful bays on Oahu. Grosvenor/Jardine has viewed this bay, not in its natural setting, but with an architect’s plans and a corporate balance sheet superimposed.

Most significantly, however, is that in Hawaii we have very little land available for residential use. Moreover, most of that land is available on only leasehold basis. Out of ethic" situation has evolved a tradition, which we choose to call the "Ethics of Hawaiian Leases", or, simply stated means, that the lessee on the land would get the first opportunity to negotiate for an extension of his lease, or indeed. a new lease at or near termination. This tradition and assured security is the only way that leases have been successfully marketed in Hawaii.

In the Malaekahana matter, we have been the victims of a gross perversion of this custom. Mindful of the "Ethic", wie were naturally angry when we found it had been ignored. We requested Grosvenor/Jardine to allow us to continue in our homes after 1975. Their response was to demand that each lessee pay them a premium of $120,000 cash, and a prohibitive lease rental of almost $4,000 per annum. I am sure you can agree with our conclusion that this so-called offer was extortionate and not made in good faith. When we tried to discuss this figure with their local representatives we wore told it was "nonnegotiable", Because we were dealing with a foreign corporation, our president, while in London, tried for two weeks to get an audience with one of the trustees for the Grosvenor Estate. but was not oven given the courtesy of a telephone interview during that entire time.

Hence, we have found ourselves in the precarious position of being dispossessed by a corporation far removed from the concerns and customs of the local community, and cast into an already critical housing market. Incidentally, we do not believe that a domestic corporation, sensitive to local customs and traditions, would have tried so devious an extortion scheme such as this.

It is most unfortunate that this homeowners association will now out of necessity, have to embroil itself in a long and expensive law suit against a foreign corporation. We do hope that congress, mindful of its obligations, will not allow American Citizens to be placed at a disadvantage when dealing with foreign corporations in the future."

David B. Fry
Malaekahana homeowners Association
December, 1973.

Dr. George Kanahele--Pacific Business News

"If Hawaii's lawmakers try to pass measures aimed at controlling Japanese investments in Hawaii, they're going to run afoul of some unavoidable obstacles."

The United States Constitution grants the power to regulate foreign commerce (investments and trade) to the Federal Government. Any law made by a State Legislature would be easily challenged and struck down. "In order to safeguard international investments as well as trade, the U.S. has entered into numerous multilateral and bilateral treaties."

As if those weren't enough we would be challenging the Administration's program of encouraging foreign (especially Japanese) investors. Secretary of Commerce Dent has said that he sees no justification for the U.S. to refuse to welcome Japanese investments.

"Last summer I conducted a survey of the 50 states regarding their attitudes and policy toward Japanese investments. Of the 48 states that replied, everyone was ready and willing to receive Japanese investors. Some had already mounted impressive promotional programs to attract Japanese capital."

April 12, 1974—Honolulu Advertiser Homeowners Sue Over Laie Leases Up-date.

The Malaekahana Homeowners Association has filed suit in Circuit Court to stop the Campbell Estate and Grosvenor International Ltd. from terminating home leases and to develop the land for town houses and vacation homes.

The suit asks that the Court issue, a declaratory judgment to have the Leases extended to 1983; order "specific performance" on the part of the estate to extend leases, and cave damages paid "in the sum to be approved at trial both for "wrongful interference with contractual relationships."

Barbara Wiebenga

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