DLNR News Release-Redevelopment of Banyan Drive May Take a Step Forward on Friday

Posted on Apr 27, 2023 in Latest Department News, Newsroom

(HONOLULU) – On Friday, the state Board of Land and Natural Resources (BLNR) will decide whether to approve the selection of Banyan Drive Management LLC (BDM) to conduct a $20 million dollar renovation of the former Country Club Condominiums complex. It is one of six buildings on state-owned land, along iconic Banyan Drive in Hilo.

BDM plans to do a complete makeover of the property, including its 152 residential units, the lobby, restaurant space, elevators, and swimming pool. Additionally, the firm plans to repave all parking and driveway areas and put in new landscaping.

Once the renovation is complete, BDM proposes operating the structure mostly as a long-term rental (80% long term and 20% extended stay hotel rooms).

The company was one of two to submit bids, after the DLNR Land Division issued a request for proposals. The highest-ranked bidder was Savio SB Growth Venture LLC (SVG). Earlier this month, SVG withdrew from the process citing a recent and ongoing downturn in mainland lending markets, which precluded it from securing financing for renovations of the building.

Last December, the BLNR approved a revocable permit and interim right-of-entry permit to BDM to manage the property, but the company notified DLNR in March that it would surrender its revocable permit. BDM cited the poor condition of the property and problems with squatters, vandalism, and sabotage of the building’s equipment.

However, once BDM learned of SVG’s withdrawal, it reiterated its interest in a long-term lease of the Banyan Drive property. It also retracted its notice of termination for its revocable permit.

BDM indicates it is open to renovating and operating the building as a 100% short-term, transit hotel, if requested by DLNR to do so.

With the BLNR’s approval, the DLNR Land Division will negotiate a development agreement for the demolition, repair, and renovation project, as well as a 65-year lease based on fair market rents. Once the development agreement is negotiated and the rent is determined, the division will return to the BLNR for approval. BDM also won approval for reduced current rent from $4,635.74 per month to $100 per month.

In its submittal to the BLNR, the Land Division noted, “This is a distressed property requiring a significant capital outlay just to maintain day-to-day operation. BDM has gone above and beyond the call of duty in managing the property under a month-to-month permit at a significant financial loss. The Land Division believes a reduction in rent is in the best interests of the state to facilitate continued operation of the property and avoid it becoming another Uncle Billy’s.”

The former Uncle Billy’s Resort and Hotel is condemned and has been the site of numerous arson fires and sweeps by law enforcement to keep people out of the crumbling, unsafe structure. The DLNR Land Division is hoping for approval to spend $12 million to demolish the building. The future use of that parcel of land has not been decided.

While the DLNR does not expect the former Country Club Condominiums property to be a revenue source for many years to come, the two major hotels (Hilo Hawaiian and Grand Naniloa), the Reed’s Bay Hotel, and Bay View Banyan apartments produce approximately $800,000 in revenue for the state on an annual basis.

Gordon Heit, the Land Division’s Hawai‘i Island Land Agent said, “I do have a vision, like many others, for Banyan Drive. I’d like to see it retain its former glory as a resort/hotel destination for east Hawai‘i. I think it can be done.”

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RESOURCES

(All images/video courtesy: DLNR)

HD video – Banyan Drive properties (April 8, 2021):

https://vimeo.com/manage/videos/570714523

(Shot sheet/transcriptions attached)

HD video – Banyan Drive aerials (August 24, 2020):

https://vimeo.com/451349115?share=copy

(Country Club Condominiums 1:17-1:27 and 4:24-4:43)

Photographs – Country Club Condominiums

https://www.dropbox.com/sh/nbtns4bedisvrr5/AADKHeCNcbCZU60kPpH6VqJCa?dl=0

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