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HomeMy WebLinkAboutCOM 0666.002 2004-2006 Harry Kim ` Lincoln S.T. Ashida Mayor ~._..T.~ Car),mnti~m Counsel Gerald Takase COUNTY OF HAWAII ~ As~~tai<co.jxnntion c~„n,se( OFFICE OF THE CORPORATION COUNSEL l01 Aupuni Street, Suite 325 Hilo, Hawa~ i 96720-4262 ~ (808) 96L8251 Fax (~08) 961.8622 February 15, 2006 Donald Ikeda, Chairman Committee on Public Works & Intergovernmental Affairs Hawaii County Council 25 Aupuni Street Hilo, Hawaii 96720 Dear Chairman Ikeda: Re: Resolution 254-06/Oceanview Inn Building Issue: Relative liabilities of disposition by sale, lease, or easement of portions of the Oceanview Inn Building. Analysis: Possible liability exposure to the County of Hawaii from any of the above-mentioned disposition methods is dependant upon the amount of ownership and control exerted over the parcel. Easement. Under an easement, the County maintains ownership over the parcel and grants permission to the easement holder to access the County's property for a specific purpose. In this case, the easement would not only be mere access, but also the business conducted by Oceanview Inn, which includes portions of the main dining room. Control over the easement remains with the landowner subject to the specific purpose stated in the easement. Lease. Under a lease, the County maintains a lesser level of ownership than an easement during the lease term. The landowner/lessor has less control over the parcel during the term of the lease. Typically, both the landowner/lessor and the lessee are named in any lawsuit. Sale. Sale terminates ownership and control over the parcel. In this case, since the County was unaware of its ownership and did not exert control over the parcel, sale would terminate liability exposure if any were to be alleged. In determining the disposition of this encroachment, it must be remembered that generally the greater the level of ownership and control exerted over a property, the greater the possible liability exposure to the owner and the person or entity exerting control. ~ The County in the case of easements and leases, still maintain ownership while surrendering various levels of Comm. No. Hawaii County is an Equal Opportunity Provider and Employer it~f. :ate Donald Ikeda, Chairman Page -2- February 15, 2006 control. While the County could place a multitude of conditions/controls on an easement or lease agreement, the County as the owner could increase its liability exposure. While duty to defend and indemnity clauses are routinely placed in any easement or lease of the County, they are dependant upon the lessee or easement holder's ability to provide such defense and indemnity. As the landowner, the County will always be a target in a lawsuit until and if the duty to defend and indemnify aze recognized by the Court. In this case, the encroachment area includes the entrance to Oceanview Inn and a portion of the undivided dining area fronting Ali'i Drive in Kailua-Kona. The following are of particular concern when liability is considered: 1. Oceanview Inn has a liquor license.2 Being that liquor will be commercially served on the premises, liability exposure increases. 2. Encroachment area is the entrance to the building and therefore receives the most traffic of the entire building. 3. Existing design and layout of the entrance could be possible hazards. a. Steep stairs. b. Narrow landing. c. Insufficient foyer relative to stairway. 4. Encroachment area is a high traffic area. 5. Structure in encroachment azea receives the most exposure to sea and elements. 6. Lack of practical delineation between the encroachment area and the remainder of the building. Sale of the encroachment area would terminate any liability concerns for the County. It is clear that the County had no control over the encroachment area and therefore very minimal liability if any. Should the County exert control and demonstrate ownership over this parcel, increased liability may likely incur. Sincerely, (r' CRAIG T. ASUDA Deputy Corporation Counsel CTM:de s:\dept\council\miscUtr Ikeda oceanview inn encroachment\2-06\CTMde.doc ~ Synopsis of §58-90 McQuillin Municipal Corporation. z As of February 15, 2006, this liquor license is temporary subject to final inspection after renovations are completed.