The state will not sell the former Country Club Condominium Hotel to a new owner, even as it seeks a new tenant for the property.
In July, the Board of Land and Natural Resources voted to solicit proposals from prospective new tenants of the Country Club property, after the current lessee, Oceanfront 121, announced that it will no longer be able to manage the property after this year.
Rather than allow the property to revert to Department of Land and Natural Resources management, new lessees will be able to submit proposals for improvements to the aging 152-unit building and demonstrate their financial capabilities. The chosen lessee could be granted a lease of up to 65 years.
However, the BLNR approved on Friday a change to that solicitation, after it was discovered that the wording of the request for proposals suggested that the approved lessee would purchase the former hotel.
“We were just about ready to publish our Country Club (request for proposal and qualifications), when we realized a document contained a provision that the (DLNR) would potentially be selling the improvements to the property,” said DLNR Land Division Administrator Russell Tsuji.
Tsuji said that, after conversations with the state Attorney General, he is unsure whether the DLNR is legally allowed to sell the hotel — which is situated on state land — to a new lessee, so he felt it better to scrap the problematic language entirely to avoid complicating the matter.
Tsuji acknowledged that, typically, the state’s practice is to require the prior lessee to remove all improvements to a property when vacating a lease. However, because of the size of the former Country Club, he said that would be unfeasible in this instance.
Kevin Moore, assistant administrator for the Land Division, said the division’s first recommendation for the building is its demolition. However, the cost to demolish the building was estimated in 2018 to be more than $6.2 million. In a July report, the Land Division estimated that, because of inflation and increased contracting costs, that price tag has ballooned to more than $10 million in 2022.
On the other hand, Moore said, renovating the building to be compliant with county and state codes will also be very costly.
Moore said prospective lessees could still choose to demolish the building, but noted that doing so will also trigger the need for another environmental assessment, while renovations of the site will not.
But in any event, no new lessee will be awarded the lease without making a big investment.
“In this case, the Country Club, we had various studies … where we studied the building and it had a very limited-term useful life,” Tsuji said. “Frankly, it’s pretty much at the end of its useful life. It needs significant renovations and improvements.”
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.