The Banyan Golf Course in Hilo might soon have new management as its owners seek to end their lease of the property.
The state Board of Land and Natural Resources today will consider a motion by WHR LLC, owner of the Grand Naniloa Hotel, to remove the Banyan Golf Course parcel from its lease of several properties on Banyan Drive in an effort to reduce rent costs.
According to a state Department of Land and Natural Resources report, WHR currently owes the state $615,536.64 in rent and other fees associated with the Grand Naniloa properties, which include the golf course. In addition to these fees, which have accumulated since August of last year, WHR has also not posted a $1.1 million performance bond that would be paid to the state in the event of such a default.
In a letter to the DLNR in November, Ed Bushor, CEO of WHR managing partner Tower Development, said WHR failed to make rent payments because of the COVID-19 pandemic.
“Due to the current COVID-19 state of affairs and the state of Hawaii travel restrictions that have shut down tourism, based on the average 25% occupancy and huge losses, (WHR) is unable to continue to generate adequate revenues to cover all operational costs,” Bushor wrote. “It is unfortunate, but until tourism is allowed to reopen and revenues are generated to allow rentals to be paid, we need assistance from the state and DLNR to help to defer ground lease rent for a reasonable period of time.”
Bushor requested in November that the DLNR defer rent payments between August 2020 and January 2021, proposing a 60-month deferred payment plan wherein WHR would make incremental payments to the tune of $10,000 a month, in addition to standard rent payments. Bushor wrote that he thinks tourism will return to a level sufficient to resume covering rent by August of this year.
DLNR Chairperson Suzanne Case denied Bushor’s request, writing in response that the DLNR cannot offer any deferment on rent to a lessee who already is in default.
Bushor made a similar request in March of this year, but no response from DLNR was publicly available. However, in April he proposed a new plan: for the DLNR to withdraw the Banyan Golf Course from WHR’s lease for the benefit of public uses.
“(WHR) has offered to provide the golf course for many types of uses such as a hula and cultural arts facility, convention space, general parking for the parks around Banyan Drive including Reeds Bay, Lili‘uokalani Gardens and the Bayfront walking paths and any other public uses needed in the Banyan Drive community,” Bushor wrote.
Bushor also suggested that WHR would continue to maintain the golf course until public use for the land was implemented.
Case wrote back in April that DLNR could not accept Bushor’s proposal as written. Instead, she recommended that the golf course be withdrawn from WHR’s lease in its entirety, giving the state full control of the property for all future uses, whether public or commercial.
Bushor agreed to the terms after some further discussion, although according to a May 13 letter from Case — the last publicly available communique between the two parties — there still is an open question of how WHR will pay its default. Bushor has repeatedly offered to deposit past due and future rent into an escrow account, which Case has repeatedly called unacceptable.
“If WHR does not agree to the state’s conditions, then the alternative is to go to the board with a request to cancel the lease,” reads the last sentence of Case’s May 13 letter.
Based on available documents, it is unclear whether the DLNR will seek a different lessee to manage the golf course or convert the land for different purposes. DLNR representatives declined to comment, while WHR representatives did not respond to requests for comment.
The BLNR will discuss the matter during today’s meeting beginning at 9 a.m. The meeting will be viewable online at www.youtube.com/c/boardoflandandnaturalresourcesdlnr.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.