The state Department of Land and Natural Resources Land Division is seeking money from the Legislature to demolish the former Uncle Billy’s Hilo Bay Hotel building.
The former 145-room hotel, which sits on state leasehold land on Hilo’s Waiakea Peninsula, has been shuttered since 2017.
An interim security contract for the Banyan Drive property expired at the end of 2021 and, according to authorities, the building has been occupied by squatters. A fire on March 4 involved about 70% to 75% of one of the building’s wings, Hawaii County Fire Chief Kazuo Todd said at the time.
According to Todd, damage sustained in the blaze has made the building more dangerous for anyone who goes inside.
“A consultant was retained to determine the cost of demolition,” a spokesman for the Land Division said in an email Wednesday. “However, procurement of a demolition contract will not commence unless and until an appropriation is received. The DLNR estimates it will cost upwards of $13.5 million to complete the demolition.”
State Rep. Chris Todd, a Hilo Democrat and the fire chief’s brother, represents the district the property occupies and has long advocated for the redevelopment of Banyan Drive.
He said Wednesday he thinks funding for the building’s demolition “is possible, but it’s unclear.”
“We should know more in a week or so, because we’re about to enter that conference committee with the budget,” the lawmaker said Wednesday. “So it is possible.”
The Board of Land and Natural Resources received one proposal for the redevelopment of the Uncle Billy’s property, from Tower Development Inc. — a managing partner of the corporate entity which holds the redevelopment lease for the Grand Naniloa Hotel.
“However, an independent committee appointed to make recommendations to the Board of Land and Natural Resources on the selection of a developer has determined it cannot recommend acceptance of the proposal to the board,” the Land Division spokesman said.
Tower Development also submitted a redevelopment proposal for the County Club Condominium Hotel on Banyan Drive, which also was rejected by BLNR.
Olson/Naniloa LLC, another partner of the Grand Naniloa entity attached to developer Ed Olson, filed a lawsuit in November accusing Tower executives Ed Bushor and Stuart Miller of breach of contract — specifically, a clause prohibiting Tower from acquiring or developing any nearby hotel property that could compete with the Grand Naniloa. That lawsuit, which is still active, calls for the court to halt Tower’s development projects indefinitely.
The Land Division spokesman said part-time security for the Uncle Billy’s site “has been solicited and will begin shortly.”
“The state is always concerned about the safety and welfare of the public and is doing everything possible to mitigate any future incidents from occurring,” the spokesman said.
According to the spokesman, there isn’t a timeline for leasing the former hotel site, but added “it is in the best interest of the community and the state to have the property cleaned up as soon as possible.”
The spokesman didn’t directly answer a question about whether the state might require the eventual lessee to pay for the demolition, but Rep. Todd indicated that could be a possibility.
“There is a provision in law that would allow the department to basically reduce or waive future lease payment if a new tenant were to cover the cost of demolition,” he said. “It applies to all of the DLNR leases.”
Senate Bill 1000 and House Bill 467, companion bills from the 2021 legislative session intending to “modernize the the policies for the management of public lands” on Waiakea Peninsula, were carried over to this year’s session, but neither gained traction.
Sen. Lorraine Inouye was the sole introducer of the Senate bill, while Rep. Todd was one of the introducers of the House bill, as were Big Island Reps. Richard Onishi, Mark Nakashima, David Tarnas and Greggor Ilagan.
“All of the bills regarding a change in management structure are all done,” Rep. Todd said. “But it is possible that money could be inserted into the budget for the tear down” of the defunct hotel.
Email John Burnett at jburnett@hawaiitribune-herald.com.
