(BIVN) – The Banyan Drive Hawaiʻi Redevelopment Agency (BDHRA) met in Hilo on Wednesday, and voted to support state legislation dealing with the Waiakea Peninsula.

The House Finance Committee recently recommended HB 2578 be passed on third reading. According to the description of the legislation, the bill:

Authorizes the designation of areas or regions of public lands classified as commercial, industrial, resort and hotel, and the establishment and implementation of guidelines for the redevelopment of the areas or regions. Designates the public lands on the Waiakea peninsula on the island of Hawaii as the Waiakea Peninsula Redevelopment District. Allows the Board of Land and Natural Resources to issue a rent reduction or waiver for certain lessees’ expenses for demolition or provision of basic infrastructure. Authorizes a local redevelopment agency to contract with a developer for construction of non-residential projects on public land within a redevelopment area. Exempts the costs of construction of work or improvements of a redevelopment project from general excise and use taxes. Takes effect upon the County of Hawaii repealing the Banyan Drive Hawaii redevelopment agency. Makes an appropriation.

A companion bill in the State Senate, SB 3115, appears to have stalled in committee. 

Hawaiʻi County Mayor Harry Kim submitted testimony in support of the house bill, saying that “we support any legislation that will help the revitalization of Banyan Drive and the rest of the Waiakea Peninsula.”

Kim noted that a conceptual master plan was created by the BDHRA, but said that funds are needed to conduct the environmental impact statements necessary to complete the plan and move forward, “and those monies are not available.”

Kim acknowledged that if the bill is passed into law, “DLNR would create a new planning committee to oversee Banyan Drive and would require BDHRA be disbanded.”

“This might mean going back to square one,” Kim wrote, “but the trade-off is that the bill presumably will provide meaningful funding using current DLNR revenues.”

The Hawaiʻi Department of Land and Natural Resources opposes the bill, however, saying there are practical problems with the bill, and that it would create “an additional layer of bureaucracy in government”. DLNR says the department “relies on the revenues from leases of public lands to fulfill its fiduciary duties.”

The DLNR also notes that “the authority to construct, improve, renovate and revitalize areas within the counties is already authorized under Section 46-80.5 and Chapter 53, HRS.”

In its testimony, the DLNR provided this update on key state parcels in the Banyan Drive resort area:

• Hilo Hawaiian Hotel: ground lease from the Department; renovated.
• Hilo Bay Café (former Nihon restaurant site): ground lease from the Department; renovated.
• Grand Naniloa Hotel: ground lease from the Department; $20 million in renovations completed in 2018.
• Golf Course: part of Grand Naniloa ground lease from the Department; requires participation of lessee for redevelopment.
• Uncle Billy’s: closed in 2017 by the Board; under Revocable Permit (RP) to Tower Development, Inc. (TDI), who is an affiliate of the lessee of the Grand Naniloa; On March 7, 2018, the Department posted a request for interest (RFI) on its website as well as on the website of the State Procurement Office regarding the potential demolition of existing structures and reconstruction of a hotel on the former Hilo Bay Hotel site. Notice of the RFI was additionally published in several newspapers in the State on March 14, 2018 with a response deadline of April 30, 2018. One response (from TDI) was received with a proposal to substantially demolish and reconstruct a branded hotel on the site consisting of approximately 125 guest rooms, fitness room, appropriate back of house spaces and food and beverage venue. TDI additionally proposed to contribute $1.5 million toward demolition costs (projected by the Department’s consultants to exceed $8 million in total). At its meeting of December 13, 2019, the Board authorized the publication of a Request for Qualifications (RFQ) / Request for Proposals (RFP) for the demolition, renovation, or partial demolition and partial renovation of the hotel under a new long-term lease. The Department is in the process of finalizing the RFQ/RFP documents for publication.
• Country Club: under RP. At its meeting of December 13, 2019, the Board authorized the publication of an RFQ / RFP for renovation of the hotel under a new long-term lease. The Department is in the process of finalizing the RFQ/RFP documents for publication.
• Reed’s Bay Resort Hotel: under RP; has some remaining useful life.