State orders Grand Naniloa to pay $615K in back rent

  • The Grand Naniloa Hotel is shown in January. (Kelsey Walling/Tribune-Herald file photo)

The state has given the Grand Naniloa Hotel one week to pay back a year of unpaid rent or else have its lease terminated.

The Board of Land and Natural Resources discussed Friday a proposal to separate the Banyan Golf Course from the lease of Grand Naniloa owner WHR LLC.

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Under the proposal, WHR, which currently owes the state $615,536.64 in unpaid rent, would continue to maintain the golf course, but the Department of Land and Natural Resources would manage the land and eventually rededicate it for public use.

However, action on that proposal was postponed until the next BLNR meeting after Ed Bushor, CEO of WHR managing partner Tower Development, promised that he would be able to repay WHR’s outstanding debts to the state in full by the end of next week.

“The board needs to know that we just signed a contract that, starting June 6, we are 100% full in the hotel with a corporate entity that has selected our hotel as the hotel that they are going to create a bubble for their whole company,” Bushor said. “They have committed $6 million in rent over the next three months, which will allow us to get caught up on everything.”

Bushor said he could not name the entity renting out the entire hotel, but it is widely rumored on social media that CBS reality show “Love Island,” which is filming its third season in Hawaii, will house its crew at the Grand Naniloa.

Because of the contract with the undisclosed company, Bushor said WHR can pay its back rent by the end of next week. The contract also allows WHR to secure a $1.1 million performance bond, which WHR has also defaulted on.

“This is a windfall for Hilo,” Bushor said. “We’re bringing every employee back, effective June 1. We’re gonna have flush cash to pay everything by next Friday.”

Even though he said WHR’s financial struggles are solved, Bushor said the hotel still wants to withdraw the golf course from the lease.

“There can be some great things done for the community out of the golf course: a hula stadium, a convention center, things long-term that can be done,” Bushor said. “The withdrawal is actually the best thing for the community.”

Bushor ultimately asked to postpone the golf course issue until the next BLNR meeting, until WHR’s outstanding debts can be resolved.

The board agreed and even granted WHR more leeway to fulfill its contract with the state. While WHR is required to pay all past due rent, including interest and late fees, no later than June 4, the state will consider the first two months of WHR’s year of unpaid rent to have been deferred as part of the state’s COVID-19 rent deferment policy. Board member Chris Yuen estimated this would save WHR about $11,000.

Even though Bushor said he could secure the $1.1 million bond as early as June 2, Yuen said WHR will have until the end of June to obtain the bond.

However, Yuen emphasized that the BLNR’s leniency has its limits.

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“If the rent is not paid, we have authorized the termination (of the lease),” Yuen said.

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

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