POSTED: 10:11 a.m. HST, Sep 13, 2013
LAST UPDATED: 12:18 p.m. HST, Sep 13, 2013
HILO >> State officials are considering extending the due date on a $250,000 lease payment for a Big Island resort as it struggles with bankruptcy and tries to find a buyer.
The Hawaii Tribune Herald reported today that Naniloa Volcanoes Resort is asking for an extension on the payment through the end of the year. A previous extension ends Monday.
Land Division Administrator Russell Tsuji of the Department of Land and Natural Resources said he is concerned a sale might not come before another payment is due.
Tsuji said the 380-room hotel was told by its trustee and bank that a sale could happen soon.
"The promise was by September, by this month already, everything was supposed to be done," Tsuji said.
David Farmer, a court-appointed trustee, says the hotel doesn't have enough money to make the payment and could shut down if it doesn't get a break.
"We're now in a dead zone," Farmer said of the slow tourist season. "We're looking at some pretty skinny income."
Farmer said two potential buyers have given letters of intent to buy the hotel, but haven't put any money down. One offer is for $12 million, while the other is for $14 million.
The hotel's owner, Ken, Fujiyama, bought its lease at auction in 2006. He used a $10 million loan to help buy the hotel, but later defaulted.
Fujiyama said he helps manage the hotel but doesn't handle its finances. He is trying to put together an offer to maintain ownership, he said.
Tsuji said an appraisal shows the lease is worth about $150,000 per year, but the $500,000 per year price can't be adjusted because it was won at auction.