Hawaii County mulls legal action against Naniloa Volcanoes Resort


Hawaii County is considering legal action against the Naniloa Volcanoes Resort, including closure of the troubled Banyan Drive hotel, after it failed a series of building inspections, Mayor Billy Kenoi said.

The inspections were done between April 24 and April 29 at the request of the state Board of Land and Natural Resources, Kenoi said, Follow-up inspections were completed last week.

A notice of violation issued May 9 to the hotel, which is going through bankruptcy and seeking a new owner, cited 24 violations of the building, electrical and plumbing codes. Among the violations are unpermitted alterations, electrical work and noncompliance with fire and safety regulations.

“We’re exploring all possible legal remedies to see what we can do to address these issues,” Kenoi said.

Asked if that includes closing the hotel, Kenoi said “absolutely.”

“That’s clearly one of the options,” he said.

Kenoi said inspectors found a “series of shoddy … maintenance and repair work” that raise “serious questions” about whether the 383-room hotel should remain open.

“The hotel guests have been staying in a building that never received final inspection after the hotel did renovations,” he said, adding that some violations raise safety concerns.

A deadline of Sept. 7 was set for the hotel to come into compliance.

“They failed to do that in many cases,” Kenoi said.

For his part, owner Ken Fujiyama said he thinks the violations are being exaggerated and he believes the hotel — once a prized Hilo establishment but now in state of disrepair — is being treated unfairly.

Fujiyama said most of the violations have been resolved. He complained that he never received a specific list of the violations and he couldn’t get a meeting with county Department of Public Works staff.

Fujiyama said he doesn’t believe a closure of the hotel, which is already struggling to stay afloat while it finds a new owner, would be justified.

He also didn’t spare criticism of Kenoi.

“He’s been trying his darnedest to make the hotel fail,” Fujiyama said.

The hotel’s problems started long before the inspections.

Fujiyama acquired the hotel and lease with the state Department of Land and Natural Resources in 2006.

While he said he has invested millions of dollars into interior renovations, he has been criticized for failing to bring the building up to par or keep it financially solvent.

The hotel, which owes over $250,000 to the state Department of Land and Natural Resources and over $400,000 to Hawaii County, defaulted on its $10 million loan with First Citizens Bank & Trust Co.

The foreclosure process started last year but was halted when the hotel declared bankruptcy last November.

Kevin Dayton, an executive assistant to Kenoi, said in a voicemail that the county has a Monday deadline to take action against the hotel.

Colliers International, which is listing the hotel for sale, has set a deadline of Oct. 18 for interested buyers to submit sealed bids.

Fujiyama said he was unsure of how a closure over the violations would impact that process.

Kenoi said the county would expect any buyer to address any remaining issues.

Email Tom Callis at tcallis@hawaiitribune-herald.com.