Fujiyama’s State Lease in Ka`u in Jeopardy

A state agency is proposing to revoke the lease of thousands of acres of state land in Ka`u held by the former owner of the Naniloa Volcanoes Resort.

Hawaii Outdoor Tours Inc. owner Ken Fujiyama is behind on lease payments for 5,821 acres of land on the makai side of Highway 11 in Kapapala, a state agency said.

According to a report from the Department of Land and Natural Resources, HOT owes $5,680 in rent for the $4,930 owed for 2013, plus late fees. The rent on the 35-year lease which expires in 2029 is due in semi-annual payments.

The DLNR is asking the Board of Land and Natural Resources to revoke the lease when it meets Friday in Honolulu.

The report said Fujiyama was notified of the default on the lease on Jan. 3. It said he agreed to pay the overdue lease within 30 days but has yet to do so.

The agency said there are also other problems with the lease. The DLNR said HOT has not posted required liability insurance nor has it submitted a conservation plan for the property.

The company does have a performance bond in the amount of $9,860 equal to twice the annual rent.

Fujiyama’s company has defaulted on the lease three times in the past five years but eventually made good on the payments. It has failed to provide liability insurance since mid-2011.

Fujiyama’s company lost the state lease to the former Naniloa Volcanoes Resort in December.

At that time, Tower Development took over the lease of the landmark Hilo hotel following a lengthy bankruptcy action that began in November 2012, two months after the bank holding the mortgage on the Naniloa filed to foreclose on the resort.

According to documents filed by Fujiyama during the Naniloa bankruptcy proceedings, Hawaii Outdoor Tours was formed by Fujiyama in 1991 “to create a tour company to provide activities on some 5,000 acres of land HOT leased from the State of Hawaii ….”

However, according to the DLNR, Fujiyama did not take control of the lease until 1999.

The document, which represented part of Fujiyama’s attempt to restructure HOT debt, said Hawaii Outdoor Tours was formed to “complement the services provided at the Volcano House Hotel,” a facility inside Hawaii Volcanoes National Park that Fujiyama previously controlled.

“HOT had requested a special use permit to allow horseback riding and camping on the property, however, the State of Hawaii took over 5 years to respond to HOT’s request, and HOT finally decided to drop its tour activities plan,” the document said.

Fujiyama also owns nearly 2,000 acres of land located along the shoreline and makai of the leased property, near a geological feature called the “Great Crack.”

Nearly a decade ago Fujiyama attempted unsuccessfully to develop the property into a subdivision.