Jobs in jeopardy after state denies lease extension for Hilo resort

Visitors and residents say the Naniloa Volcanoes Resort overlooking Hilo Bay has fallen into a state of disrepair and the current owner has fallen behind on payments.

“Hilo Hawaiian hotel every day get people who walk across and say, ‘Excuse me, can we check in?’ We didn’t know it was like this. It’s one black eye,” Big Island Mayor Billy Kenoi said.

Mayor Kenoi went before the Department of Land and Natural Resources, which heard arguments Friday about the hotel’s lease.

Hotel owner, Hawaii Outdoor Tours, filed for bankruptcy months ago. At issue is the lease for the land under the hotel. It’s good for another 58 years, but on Friday, the DLNR rejected the bankruptcy trustee’s request for an extension. Dozens of jobs could be affected.

“There’s a staff there and there are people there. We have to keep informed about what’s going to happen,” bankruptcy lawyer Tim Hogan said.

Bankruptcy trustee David Farmer says there are interested buyers, but adds the Banyan Drive property doesn’t come cheap.

“Because it’s an expensive lease — it’s a $500,000 a year lease — which when you compare to the other hotels along Banyan Drive, is over market,” Farmer said.

The bankruptcy trustee has been in charge of hotel operations for months. But as of Monday, that could all end.

“Bankruptcy right now is owning and operating the hotel. And if we don’t have a lease, we don’t have the wherewithal to continue operations. And it will lead to a shutdown, loss of jobs, end of economic life of the hotel,” Farmer said.

Unless something changes over the weekend, the Naniloa lease will expire and the hotel will shut down.

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