After years of bureaucratic wrangling, a Hilo lessee of state land has finally secured a 30-year lease extension for property in the Kanoelehua Industrial Area.
A pilot program launched in 2018 allowed lessees of land in the Kanoelehua Industrial Area in Hilo to have their leases — many of which were nearing expiration — extended with the Department of Land and Natural Resources. As an effort to reverse the area’s general dilapidation, the program required lessees to make certain investments in their properties in order to be granted extensions.
Jim McCully, lessee of a 4.5-acre property in the Kanoelehua Industrial Area, applied for the program in 2019, given that his lease was set to expire in 2026. But it would take five years before the Board of Land and Natural Resources approved a development agreement for a 30-year extension to the lease.
That agreement was approved at a Friday BLNR meeting. While McCully said there are still some legal and procedural matters to finish before the extension is officially granted, he added that the lion’s share of the work is, finally, done.
“Practically speaking, this was the last real hurdle to cross,” McCully said on Monday.
The delays have been particularly difficult for McCully, whose application for the extension was submitted in a very different world than the one in which it was approved. He had received bids from contractors about his planned improvements in 2019, but by the time DLNR took any action on his application, the COVID-19 pandemic forced all but one of them to back out.
Now, McCully said, the cost estimates for his planned improvements have ballooned after major inflation.
“What was going to cost around $600,000 … now I’m looking at around $1 million,” McCully said. “But I can’t compromise on it. If I’m replacing the roof, I can’t just replace half the roof. I’m stuck with it, I’ve got to make that investment, and I can’t raise my rents one penny … But that’s the bargain I signed and I’ll have to deal with it.”
McCully said he “compromised a lot” at Friday’s meeting, agreeing to all of BLNR’s proposed terms, including an increase to the annual rent due to the state.
McCully’s is only the fifth lease to be extended through the state program. But, he said, his success, delayed though it may be, could hopefully grease the wheels for other lessees to get their extensions approved more expediently.
“I’m hoping I might be a sort of bellwether, as maybe the most noticeable lessee to get an extension,” McCully said, referring to his lengthy and well-documented struggles with the state. “If I could get through, then maybe smaller lessees will be able to get through more easily. That’s what I hope.”
The current BLNR administration, under chair Dawn Chang, is also significantly more responsive and engaged in Hilo matters than the previous administration, McCully said.
While Friday’s meeting was largely not contentious, it received a shot of unwanted spice when an unknown person attending remotely via Zoom shared explicit and very loud pornographic videos without warning, leading to a brief pause to the meeting.
Although BLNR staff removed the videos quickly, McCully suggested that the interruptions may have posed a “valuable distraction” by compelling the board to move along with the agenda rather than linger and allow the troublemaker to continue disrupting the meeting.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.
