Kenoi Optimistic About Naniloa’s Future

Mayor Billy Kenoi is optimistic about the future of what was formerly known as the Naniloa Volcanoes Resort.

The sale of the Banyan Drive landmark was completed Tuesday.

Kenoi told Big Island Now that he has met with Ed Bushor, one of the investors in WHR LLC, the new owner of what is temporarily being called the Naniloa Hilo Hotel.

Mayor Billy Kenoi. Courtesy photo.

He said Bushor told him that violations of county building codes and other problems he inherited with the resort would be resolved.

“I assured him that if they kept their word and kept to their timetable, the county would be as supportive as it could,” Kenoi said. “If not, then we would hold them accountable.”

The dozens of violations of building, electrical and plumbing codes assessed by the county against former Naniloa owner Ken Fujiyama had the mayor threatening to shut down the resort several months ago.

An attorney for Bushor last week submitted a timetable to the state that said renovations to two of the hotel’s towers would be completed by the end of 2014.

Kenoi said the addition of Edmund Olson as an investor in the resort was also an encouraging sign. Olson is a former self-storage magnate who has become a major Big Island landowner.

“So far it’s good news,” he said. “We’re heading in the right direction.”

However, state officials remain concerned about the precedent set by the federal bankruptcy court’s approval of the transfer of the state lease along with the resort property.

The Department of Land and Natural Resources has argued that the lease transfer should be subject to approval by the state, and has filed notice that it intends to appeal the sale.

Russell Tsuji, head of the DLNR’s Land Division, said today that the state’s attorney general is continuing to review the matter.

Tsuji noted that the Naniloa’s new owners are “walking into a default situation immediately.”

The state said in October that because of numerous violations, it was inclined to cancel the lease, but was prevented from doing so by Fujiyama’s filing for bankruptcy in November 2012.

He said while the state received about $260,000 from the sale proceeds, apparently to cover an overdue semi-annual lease payment, it still is awaiting payment of the $1 million performance bond required by the terms of the lease.

While the sale has resolved some outstanding issues, such as payment of overdue rent and back taxes, there are numerous others that need to be resolved, Tsuji said.

That includes renovation of the third tower, he said.

According to Bushor’s timetable, how that will be handled has not yet been determined.

–Nate Gaddis contributed to this article.