The former Country Club Condominium Hotel could fall under new management this year after the Board of Land and Natural Resources decides whether to open requests for new lessees for the property.
According to a report by the Department of Land and Natural Resources’ Land Division, the Country Club’s current lessee — a business called OceanFront 121, which took over management in 2019 — has informed the department that it is unable to continue managing the property and intends to surrender the permit at the end of the year.
The report states that OceanFront’s month-to-month revocable permit does not allow it to make long-term investments in the ailing property, hence the surrender.
Faced with the prospect of having to manage a residential building or spend resources to vacate it, the Land Division has recommended that the board allow the division to put out a request for proposals from prospective new lessees who would continue to operate the property as a hotel or apartment complex.
The Land Division’s report notes that any potential long-term lessee will have to take on a significant investment, including site improvements, hazardous material remediation, expansion of parking spaces, development of contingencies for sea level rise, and more. Because of this, all applicants will be evaluated based on experience, expertise and financial capacity.
The selected lessee could receive a lease for up to 65 years.
The report also noted that there is a real property tax delinquency of nearly $100,000 associated with the property, although it determined that neither OceanFront nor any prospective new lessee would be held responsible for it. Instead, the report concluded that the County of Hawaii likely will have to pursue individual condominium unit owners to pay their back taxes.
That the state is seeking a long-term new lessee for the property is somewhat at odds with a 2016 report by Honolulu firm Erskine Architects, which estimated that the aging building only had three to six years of remaining useful life, and recommended that the building be demolished.
However, the Land Division has estimated that it would cost more than $10 million to demolish the building, money which the DLNR does not have.
The DLNR did solicit proposals to redevelop the property in 2020, and received three applications, one of which the Land Division tentatively recommended in 2021.
But because of an elaborate series of financial and legal crises that beset the applicant since then, the DLNR has since cancelled that solicitation, terminating all three applications.
At the same time, the DLNR also solicited proposals to redevelop the nearby former Uncle Billy’s Hilo Bay Hotel, only to rescind the solicitation for the same reason.
The DLNR has not reopened any request for proposals for the property since then — unlike the Country Club, Uncle Billy’s is uninhabitable and must be demolished before the property can be used.
The BLNR will determine whether to seek new lessees for the Country Club at its 9 a.m. meeting today.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.