DLNR Reviewing Options on Expiring Banyan Drive Leases

The state is trying to figure out what to do with three aging buildings on expiring state leases on Hilo’s Banyan Drive.

The current leases under the Reed’s Bay Hotel, Country Club Condominium Hotel and Uncle Billy’s Hilo Bay Hotel will end on March 14, 2015.

A planning consultant hired by the Department of Land and Natural Resources has determined the structures have an estimated remaining life of eight to 15 years.

“Accordingly, any future use of the properties will likely involve major renovations to existing buildings, or demolition of these properties and construction of new ones,” the DLNR said in a report prepared for the state Board of Land and Natural Resources.

The land board on Friday authorized the DLNR to hire an architect to help it determine various options for the properties before they are put out for new leases.

The properties are all located in the special management area (SMA) and the tsunami inundation zone.

While the existing buildings were built before the enactment of the SMA law, any major renovations or new construction will trigger that law’s requirements. Either would also have to be in compliance with a shoreline setback of 40 feet and tsunami inundation requirements.

The report said all that information, as well as sea-level rise, would have to be considered to determine the highest-value and best use of the properties.

The DNLR told the land board that it will come back for further approvals after the consultant’s report is complete.

The leases were originally issued in 1949 and extended to 2015 following the 1960 tsunami.

The upcoming end of the leases has caused steep drops in the prices of condos in the buildings in recent years.

Mayor Billy Kenoi, who was critical of the state’s handling of the Naniloa resort’s lease under former owner Ken Fujiyama, last year asked the Legislature to give Hawaii County control over all of the state leases on Banyan Drive.

The resulting bill, which the DLNR opposed, was amended to require the state to “negotiate” with the county over the lease transfer and later died.