Airport hotel bond bill still alive: Measure would provide up to $50M in revenue bond funding

  • A bill to issue up to $50 million in revenue bonds for a planned hotel at Ellison Onizuka Kona International Airport at Keahole continues to make it through the Legislature for a final hearing. (Laura Ruminski/West Hawaii Today)

A bill to issue up to $50 million in revenue bonds for a planned hotel at Ellison Onizuka Kona International Airport at Keahole continues to make it through the Legislature for a final hearing.

The state Senate Committee on Transportation March 24 adopted Senate Bill 256 with amendments for the purpose of assisting Keahole Hotel &Suites LLC for planning, designing, constructing, and equipping facilities for a hotel at the airport.

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Lawmakers found the issuance of special purpose revenue bonds was in the public interest and for the public health, safety, and general welfare.

The Leeward Planning Commission passed the land use designation last August, paving the way for the hotel to be built.

The county-level commission granted approval after hearing from state airport staff, testifiers opposing the plan and the developer, Melvin Mason who is listed as agent for Keahole Hotel and Suites, who already holds a 35-year lease at the airport and wants to build the Hotel.

The measure created the category of primary airport that will apply to Kona and Hilo International Airport.

It’s defined as a publicly owned airport that has more than 10,000 passenger boardings each calendar year, as defined by the Federal Aviation Administration.

Standard accessory uses for primary airports include, but are not limited to, retail establishments for shopping including duty-free shops, dining establishments that may be consolidated in food courts, automobile rentals, service businesses, offices, conference centers and hotels. The accessory uses must be located on publicly owned lands and support airport operations, under the resolution.

If passed by the Legislature, the bond approval would be the first step in a long process to build the hotel.

Sen. Lorraine Inouye (D-North Hawaii) introduced the bill along with two other senators.

“Anyone can apply for a general revenue bond at low interest rates,” said Inouye adding once the bill gets sent to the finance committee, a vetting process will be performed.

Building the hotel would require a Special Management Area permit and an environmental assessment, at the least.

Keahole Enterprises won a 35-year lease for a 239,456-square-foot tract at the southeastern end of the airport, the location tentatively planned for Keahole Hotel &Suites. Keahole Enterprises is paying $126,912 annually for the lease Mason won after approval in late 2016 by the Board of Land and Natural Resources.

At the August Leeward Planning Commission meeting, Chauncey Wong Yuen, Hawaii district manager for the state Department of Transportation’s Airports Division said he and Mason are longtime friends, but the hotel project will be a competitive project, with the state issuing a request for proposals and evaluating responses.

“It will be there for all entities to bid on,” Wong Yuen said. “Anyone would be able to do this. It is not limited to him.”

However, SB 256 specifically states “for the purpose of assisting Keahole Hotel &Suites LLC, a Hawaii company, for planning, designing, constructing, and equipping facilities for a hotel at the Ellison Onizuka Kona International Airport at Keahole. The legislature hereby finds and determines that the planning, designing, constructing, and equipping of facilities for a hotel at the Ellison Onizuka Kona International Airport at Keahole constitute a project as defined in part V, chapter 39A, Hawaii Revised Statutes, and the financing thereof is assistance to an industrial enterprise.”

“I’m the guy who created the project,” said Mason. “When I propositioned this project there was no other hotel or no other business or no other people pursuing this. They don’t want to deal with the bureaucracy because it wasn’t even zoned properly.”

“State Airports will put it out for bid,” said Inouye. “They will be like any other developer.”

Mason is listed as an agent or member of six LLC’s in Hawaii, including House of Aloha Enterprises LLC which is subject of a proposed special purpose revenue bond in the senate.

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If passed, Senate Bill 579 would “issue special purpose revenue bonds in a total amount not to exceed $100,000,000, in one or more series, for the purpose of assisting House of Aloha Enterprises LLC, a Hawaii limited liability company, with planning, designing, constructing, and equipping facilities for the purpose of creating business in Hawaii for the manufacturing, processing, and distribution of products such as but not limited to the production of value-added agricultural, advanced materials, sustainable, and fine art products. The legislature hereby finds and determines that the planning, designing, constructing, and equipping of facilities in Hawaii for the manufacturing and processing of products such as the production of value-added agricultural products.”

Both bills await a hearing date in the House Finance Committee.