D-3 BLNR Issuance of a Request for Qualifications/Request for Proposals

Home

BLNR—RFQ/RFP for Uncle Page 5 December 13, 2019 Billy's Lease purposes that would include an obligation to conduct an environmental assessment(EA) or environmental impact statement (EIS) for the demolition of the existing structures on the site and construction of a new hotel thereon, secure the permitting and approvals needed for the demolition and new construction, complete the demolition, and construct a new hotel. As a result of the County DPW Building Division and Fire Department inspections, Mayor Harry Kim wrote a letter to the Chairperson dated June 16, 2017 with the recommendation that the hotel should be vacated immediately.2 Upon receipt of the Mayor's letter, the Chairperson directed the immediate closure of the hotel. Land Division staff contacted Savio and measures were taken to relocate the guests then occupying the hotel rooms. Hotel services were effectively ended on June 19, 2017. At its meeting of July 14, 2017, under agenda Item D-2, as amended,the Board approved the issuance of a revocable permit to Tower Development, Inc. (Tower), an affiliate of WHR LLC, who is the lessee of the neighboring Grand Naniloa Hotel Hilo. Revocable Permit No. 5-7905 was thereafter issued to Tower for security and property management purposes. The permit, which remains in effect, specifies that the property shall not be used for hotel-resort or lodging purposes. REMARKS: Redevelopment of the subject property has proven to be a challenge. The land is improved with a 146-room hotel constructed in phases between 1966-1970. A remaining useful life study completed in June 2014 indicated that the improvements at that time had a remaining useful life of 5-10 years. An architectural study completed in June 2016 by Erskine Architects, Inc. (Erskine Report) determined that hotel should be demolished. A copy of the Erskine Report recommendations as they relate to the subject property is attached as Exhibit D. However, the Department has no money to demolish the existing hotel. The Department procured R.M. Towill Corporation (RM Towill) as a consultant to estimate the cost of demolition. RM Towill's report issued in February 2018 determined the demolition cost would be $8,287,605. The RFI that the Board approved at its meeting of June 9, 2017 was published on March 7, 2018 with responses due by April 30, 2018. Only Tower responded to the RFI, explaining that it could contribute$1.5 million toward the site demolition work,but would require a rent credit for any demolition expense above that amount. This means that the State would still need to bear the lion's share of any demolition costs for the existing hotel in the event of a complete teardown and rebuild. 2 A formal Notice of Violation was sent via Certified Mail dated 6/22/17 to Permittee and the Hawaii District Land Office.