Bill Would Give Banyan Drive Properties to County

State lawmakers are considering a bill that would transfer nine state properties on Banyan Drive to Hawaii County.

The properties include Hilo’s two biggest hotels, the Naniloa Volcanoes Resort and the Hilo Hawaiian Hotel.

The latest draft of Senate Bill 1361, which was introduced by Sen. Malama Solomon of the Big Island and Sen. Donovan Dela Cruz of Oahu, will be taken up at 10:05 a.m. Tuesday by the Senate Ways and Means Committee.

The original wording of the bill was so vague that the state agency it affected the most – the Department of Land and Natural Resources – apparently misunderstood its intent when the measure came up for its first hearing before two committees on Feb. 5.

The first draft said the governor “is authorized to turn over in fee simple Banyan Drive located in Hilo to the county of Hawaii.”

Testimony to from DLNR Chairman William Aila Jr. to the committees said the bill was not clear about which Banyan Drive was to be transferred – the one on the Banyan Peninsula containing the hotels and the one on the other side of Reed’s Bay also known as Ocean View Drive.

Either way, both are already under county control, so the bill was unnecessary, Aila’s testimony said.

But the bill was amended at the Feb. 5 joint meeting of the Senate committees on Water and Land, chaired by Solomon, and Public Safety Intergovernmental and Military Affairs, chaired by Sen. Will Espero. It was changed to say it involved “certain properties” along Banyan Drive and listed them by tax map key numbers.

The bill’s second draft included another amendment to change the method of transferal to legislative action instead of by governor’s executive order.

No reason for the transfer is given in the bill.

However, the report from the joint committees states that the jurisdiction over the properties “should rightfully rest with the County of Hawaii as the more appropriate government administrative entity.”

According to the committee report, only the Hawaiian Affairs Caucus of the Democratic Party objected to the bill. The caucus said the measure would “undermine the intent of prohibiting any further unlawful taking or selling” of state or ceded lands.

The report said that testimony had also been submitted by Hawaii County, but that could not be found on the Legislature’s website.

Neither Solomon nor Mayor Billy Kenoi returned calls seeking comment.

The last time the Legislature considered changing the ownership of the Banyan Drive properties was during the 2012 session, when former Rep. Jerry Chang proposed putting them under the control of a “development district,” an entity similar to the Public Land Development Corp.

But Chang’s bill was put on hold after the DLNR was critical of the measure. At that time Aila said he would rather see development of the properties done by the PLDC, and also said that his agency could not afford to lose the roughly $800,000 in annual rental income the properties produce.

Aila said that lease income helps fund the management of the 1.3 million acres statewide under the DLNR’s control.

At $500,000 per year, the Naniloa provides the biggest portion of that lease income followed by the Hilo Hawaiian at $133,200, the bill said.

The bill does not address another issue involving the properties, the fact that the leases on five of the properties expire on March 14, 2015.

That pending expiration has resulted in condominiums on those properties selling in recent years for as little as 10% of what they would be worth under a long-term lease.

The Naniloa and Hilo Hawaiian are among the exceptions with leases lasting until Jan. 31, 2071 and April 14, 2031, respectively.