A Hilo hardware store may be among the first businesses in the Kanoelehua Industrial Area to apply to extend its lease next year.
HPM Building Supply is working closely with the Department of Land and Natural Resources, as well as state lawmakers, to develop a reinvestment plan that will allow it to extend its lease on public land for up to 40 years.
Jason Fujimoto, president and chief operating officer for HPM, said HPM is getting ready to submit its application to the DLNR early next year.
“We established our Hilo location in 1961,” Fujimoto said. “It’s in the community’s best interest to allow us the lease extension.”
Earlier this year, the passage of Senate Bill 3058 established a program to allow lessees of public lands in the Kanoelehua Industrial Area to extend their leases by up to 40 years, with the condition that they make improvements to the properties by reinvesting in them.
The redevelopment plan came in response to the approaching end of many leases in the Industrial Area. Many of the leases were established after the 1960 tsunami, allowing businesses to lease the public land for up to 55 years.
While many of the 55-year leases have been extended by 10 more years, there was no mechanism in place to renegotiate the leases after they expired. Because of this, lessees have been reluctant to continue to invest in properties whose futures are uncertain.
“There’s no reason to put money in a place if you don’t know if you’ll still have it in 10 years,” Fujimoto said.
Thanks to the redevelopment plan, lessees have the option to renew their leases for an additional 40 years — although state Rep. Chris Todd, D-Hilo, said those leases which were already extended by 10 years can only renew them for an additional 30.
“[The lease extension] is not an example of businesses being given a sweetheart deal,” Todd said. “A lot of them were already forced out of the bayfront area because of the tsunami.”
Todd, along with the DLNR and fellow lawmakers, has been working closely with business owners in the Industrial Area to discuss their options. The meetings with the area lessees have been fruitful, he said.
“Everyone’s looking to make it work,” Todd said.
Of the businesses interested in a lease extension, Todd said he expects HPM might be the first to submit an application. Regardless of which business does so, he said it will serve as a bellwether for how the approval process will go. Todd said the approval process might take between three to six months assuming all the required paperwork is properly submitted, but strongly emphasized that nobody is quite sure how the process will work.
Fujimoto said he couldn’t explain the specifics of HPM’s investment plan, although he acknowledged that it will require millions of dollars of investment over the course of a decade.
Email Michael Brestovansky at email@example.com.