Ige signing bill that bodes well for Banyan Drive, Kanoelehua lessees

  • HOLLYN JOHNSON/Tribune-Herald A view from a fixed-wing airplane shows part of Wailoa River State Recreation Area and other portions of Hilo on June 6, 2018. For reference, the green buildings in the center of the photo are Chiefess Kapi‘olani Elementary School.

Gov. David Ige will visit Hilo today to sign a redevelopment bill intended to revitalize Banyan Drive and the Kanoelehua Industrial Area.

In an effort to incentivize improvements to leased property in the Kanoelehua Industrial Area, Senate Bill 3058 will set up a 10-year pilot program that establishes a “Hilo community economic district” around the area.

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The district encompasses all state lands in the industrial area as far south as Makaala Street, Banyan Drive and the Waiakea Peninsula, Wailoa River State Recreation Area, the Bayfront ball fields and along Kalanianaole Avenue.

After the bill is signed, lessees of public lands within the economic district will be allowed to extend their leases by up to 40 years provided they make improvements to their property.

“As it is now, the options for lessees whose leases are running out are: go out of business or spend potentially millions of dollars buying new property somewhere else,” said state Rep. Chris Todd, D-Hilo.

Todd said lawmakers for years have discussed what to do with the expiring leases in the area. Many of the leases were established after the 1960 tsunami, and there was no option to renegotiate the leases after their terms expired — in many cases, 55 years, although some received 10-year extensions several years ago.

Consequently, with their futures uncertain, many lessees were reluctant to invest into their leased properties, with many properties becoming dilapidated in the area, Todd said.

With the new law, lessees who invest 30 percent or more of the property’s market value can qualify for a 40-year extension to their lease.

“This ultimately will preserve jobs and help local companies stay in business,” Todd said.

Hawaii Island Chamber of Commerce President Gordon Takaki said in a statement that the bill is “probably the biggest thing to happen to the (Kanoelehua Industrial Area Association)” since it was established in 1960.

The bill will take effect immediately upon signing. Todd said Ige will establish a task force to determine how the economic district will be administered.

While the bill successfully passed through the state Legislature in early May, other bills with similar objectives failed to pass. One bill, Senate Bill 2972, would have directed 10 percent of the state’s lease revenue on the Waiakea Peninsula toward redevelopment efforts on Banyan Drive.

While SB 3058 does include Banyan Drive within the economic district, it establishes no funding mechanisms for the area.

Todd predicted the bill will bring not only long-term benefits to Hilo, but also a short-term economic upswing.

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“There’s going to be a mini-construction boom in Hilo,” Todd said. “And after all of this, with the eruption, we’re going to need all the economic development we can get.”

Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.

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