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

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BLNR—RFQ/RFP for Uncle Page 7 December 13, 2019 Billy's Lease Staff believes the proposed RFQ/RFP process is in accordance with the requirements of HRS §171-59(a) and is preferable to the public auction process for selecting a lessee for the subject property. A lease for hotel/apartment purposes is the highest and best use under County zoning. • Request for Qualifications/Request for Proposals (RFQ/RFP): HRS §171-59(a) provides that a lease of public land may be disposed of through negotiation (rather than by public auction) upon a finding by the Board that the public interest demands it. HRS §171-59(a) also provides a process under which the Board may select the lessee. This process entails the public solicitation of applications/proposals from prospective lessees and allows the Board to select the lessee based on its evaluation of the applications/proposals. Renovation of the existing hotel improvements originally constructed between 1966-1970 will involve significant effort (e.g., obtaining Special Management Area approval or at least review, possible lot consolidation and re-subdivision, building permit approval, etc.) and a substantial investment. The property consists of four separate lots and existing structures cross lots lines. A prospective lessee under the new lease will need to consult with the County Planning Department to determine if lot consolidation and re-subdivision will be required as part of any rehabilitation. The improvements contain hazardous materials that will require remediation as outlined in the Erskine Report and RM Towill report. A portion of the property is occupied by a convenience store that remains in operation. Careful planning will be required to protect the health and safety of the store operator, its employees and customers if the store is to remain in operation during the renovation work. Additionally, the property currently has 38 parking spaces on site. County of Hawaii Zoning Code requires a total of 214 spaces for this property. The property currently has two parking stalls accessible to persons with disabilities when the law requires seven, and it has no loading spaces when the law requires four, including one loading zone accessible to persons with disabilities. Further, the property is located on the shoreline and a long-term lessee of the property will need to develop plans and contingencies for sea level rise.4 Staff believes the renovation efforts, lot consolidation/re-subdivision, safeguarding of the convenience store occupants,resolution of the parking stall and loading zone shortage, and sea level rise planning, are best undertaken by a private lessee with the necessary expertise and financial capacity. Due to the expertise and substantial investment required to renovate, demolish, or partially renovate and partially demolish the hotel under the conditions described above, staff believes a lease for the property should be issued by direct negotiation with a lessee selected via a public RFQ/RFP rather than via the public auction process. The RFQ/RFP process will allow the Board to evaluate prospective lessees based on a variety of factors, 4 In 2014, a consultant procured by the Department issued a report evaluating the impact of sea level rise on this and other State properties at Waiakea Peninsula. The study found that the subject land is not predicted to experience a substantial property loss due to a three-foot sea level rise.