Five industrial Hilo properties will be put up for auction for prospective lessees after years of vacancy.
The Board of Land and Natural Resources on Friday approved a plan to sell at auction the leases for five parcels of state-owned land in the Kanoelehua Industrial Area, with the condition that the winning bidders commit to removing any improvements to the property at the end of their leases.
“This will be our first auction in several years, so we’re quite excited about it,” said Gordon Heit, Department of Land and Natural Resources District Land Agent for the Big Island, at a BLNR meeting on Friday.
Four of the five properties have been vacant for years, Heit said, with the previous tenants having been awarded 55-year leases in the early 1960s that have since expired. They include four adjacent properties located on Pookela Street and a fifth on Wiwoole Street, both immediately west of Highway 11.
The four Pookela properties were formerly leased to businesses including K. Sakai Painting, Andrew Trucking Service, A &A Hawaii Inc., and Hilo Electric &Carburetor Service. Several of those leases were terminated early for various reasons, and one parcel currently is occupied by a replacement tenant, Hilo Termite and Pest Control.
The lone Wiwoole Street parcel was previously occupied by Hawaii Pest Control Company.
All five properties range between 10,000 and 15,000 square feet, each featuring office and warehouse buildings in varying need of repairs.
“They were built back in the ’60s, and when we lease them out, we’ll lease them as-is,” Heit said.
Land Administrator Russell Tsuji said the new leases would be awarded for another 65 years, with rent payments to be determined by future individual appraisals. He added that standard procedure allows for rent to be waived for up to two years if the new lessee invests 30% or more of the property’s appraised value into site improvements.
Tsuji added that Land Division is contemplating including a “demolition credit” that would allow incoming lessees to receive a partial credit for fees incurred for demolishing existing structures on the properties.
BLNR chair Dawn Chang recommended adding terms to the lease agreements requiring incoming lessees to remove any improvements on the land at the termination of their lease, in order to avoid “an Uncle Billy’s situation,” referring to the derelict former hotel on Banyan Drive which, despite being a public health hazard for years, hasn’t been demolished because of the high cost of doing so.
Heit explained that the auction will be advertised at a future date after assessments are conducted on the properties.
The BLNR voted unanimously in favor of the auction.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.