The leases for three Banyan Drive properties will expire next year, leaving hotel operators and residents little certainty about their future.
The properties cover Uncle Billy’s Hilo Bay Hotel, Country Club Condo Hotel and Reed’s Bay Resort Hotel. Each lease with the state Department of Land and Natural Resources expires in March 2015, and the department is studying what to do with the land going forward.
A consultant’s report is expected to be complete this summer, said Gordon Heit, DLNR’s Hawaii Island district land agent. In the meantime, proposals for new or extended leases aren’t being sought or brought before the state Board of Land and Natural Resources.
Heit said the report will provide a clearer picture of “how we want to proceed.”
For Uncle Billy’s, that leaves the hotel unable to make reservations beyond Jan. 31, forfeiting, for now, bookings for the lucrative Merrie Monarch Festival week.
“We could not be here,” said manager Aaron Whiting.
The hotel, founded in 1964, has 145 rooms and about 40 employees, he said.
Donald Inouye, Reed’s Bay Resort Hotel president, said he is also not taking reservations for next year’s Merrie Monarch Festival week.
Inouye said he submitted a proposal for a lease extension that would involve significant renovations last October. He said he hasn’t heard back yet from DLNR.
The approximately 60-room building is mostly occupied by people in long-term subleases, he said.
Those subleases are scheduled to expire when the master lease ends.
As part of the study, DLNR is also considering whether it should continue to allow residences on Banyan Drive, or make it more visitor-based.
Heit said the area plays a “central role in East Hawaii,” and the department wants to “keep it focused on that direction.”
Russell Tsuji, DLNR land administrator, said a market analysis will help determine whether condos should be replaced by hotel-only operations.
“Ultimately, it will be going to the board for discussion,” he said.
That could have the most significant impact on the Country Club, which has 150 units, almost all condos.
The condo building also has more immediate issues.
The condo owners are split into two associations, and the building has been struggling to pay its electrical bill.
Hawaii Electric Light Co., after providing a few extensions, is giving the condo until Monday to pay its bill.
George Van Buren, a court-appointed receiver, said he is seeking another extension with the utility.
The master lease belongs to Herbert Arata. He could not be immediately reached for comment.
Heit said Country Club owes about $5,000 in lease payments.
Email Tom Callis at tcallis@hawaiitribune-herald.com.
