STATE OF HAWAII DEPARTMENT OF LAND AND NATURAL RESOURCES

Land Division Honolulu Hawaii 96813

February 22 2019

Board of Land and Natural Resources State of Hawaii Honolulu Hawaii Hawaii

Mutual Cancellation of Non-Exclusive Easement S-5963 BP Bishop Estate Grantee for Building Foundation Footings Kahaluu North Kona Hawaii Tax Map Key (3) 7-8-013042

PURPOSE

Mutual cancellation of Non-Exclusive Easement S-5963 BP Bishop Estate Grantee

LEGAL REFERENCE

Section 171-53 Hawaii Revised Statutes as amended

LOCATION

Submerged Government land situated at Kahaluu North Kona identified by Tax Map Key (3) 7-8-013042 as shown on the attached map labeled Exhibit A

AREA

0128 acre or 5557 square feet more or less

ZONING

State Land Use District Conservation County of Hawaii CZO Not Applicable

TRUST LAND STATUS

Section 5(b) lands of the Hawaii Admission Act DHHL 30 entitlement lands pursuant to the Hawaii State Constitution NO

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BLNR Cancellation of GL S-5963 Page 2 February 22 2019 Kahaluu North Kona Hawaii TMK (3) 7-8-013042

CHARACTER OF USE

Non-exclusive term easement purposes

TERM OF EASEMENT

65 years commencing on January 12 2007 and expiring on January 11 2072

ANNUAL RENTAL

One-time payment of $6100000

REMARKS

Due to certain Supreme Court rulings regarding shoreline boundaries it was determined that foundation pilings that were installed in connection with the construction of the Keauhou Beach Hotel were encroaching on a tidal pool area owned by the State of Hawaii As a result with the required Board approvals and by way of public auction a grant of non-exclusive term surface easement for the encroachment identified as Non-Exclusive Easement S-4227 was issued to Island Holidays Ltd dated February 7 1969 with an expiration date of February 6 2034

Through mesne assignments the easement was assigned to KBH Inc which had plans for a total re-development of the resort The financing required a term greater than the remaining on the easement and at its meeting of January 12 2007 item D-2 the Board approved termination of the original easement and sale of a new 65-year easement to KBH Inc for the submerged land area The new easement contains a provision for the easement to run with the land and inure to the benefit of TMK (3) 7-8-013043 (the hotel property) which is owned by BP Bishop Estate (KSBE)

In 2012 KBH Inc ceased operations of the Keauhou Beach Resort and its lease with KSBE for the hotel lands was cancelled The Hawaii District Land Office (HDLO) was contacted by KSBE to determine what needed to be done to cancel the easement and remove the hotel footings from the easement area

KSBE is in the process of developing the former hotel site as part of its Kahalursquou Ma Kai Educational and Cultural Complex (Project) The plan called for the hotel to be demolished and the footings leveled with the surrounding floor of the tidal pooi area KSBE was responsible for all permitting and environmental compliance The process was lengthy but finally completed in late 2018 (see photos attached as Exhibit B)

Since the purpose of the easement was to accommodate the encroaching footings of the

BLNR Cancellation of GL S-5963 Page 2 February 22 2019 Kahaluu North Kona Hawaii TMK (3) 7-8-013042

CHARACTER OF USE

Non-exclusive term easement purposes

TERM OF EASEMENT

65 years commencing on January 12 2007 and expiring on January 11 2072

ANNUAL RENTAL

One-time payment of $6100000

REMARKS

Due to certain Supreme Court rulings regarding shoreline boundaries it was determined that foundation pilings that were installed in connection with the construction of the Keauhou Beach Hotel were encroaching on a tidal pool area owned by the State of Hawaii As a result with the required Board approvals and by way of public auction a grant of non-exclusive term surface easement for the encroachment identified as Non-Exclusive Easement S-4227 was issued to Island Holidays Ltd dated February 7 1969 with an expiration date of February 6 2034

Through mesne assignments the easement was assigned to KBH Inc which had plans for a total re-development of the resort The financing required a term greater than the remaining on the easement and at its meeting of January 12 2007 item D-2 the Board approved termination of the original easement and sale of a new 65-year easement to KBH Inc for the submerged land area The new easement contains a provision for the easement to run with the land and inure to the benefit of TMK (3) 7-8-013043 (the hotel property) which is owned by BP Bishop Estate (KSBE)

In 2012 KBH Inc ceased operations of the Keauhou Beach Resort and its lease with KSBE for the hotel lands was cancelled The Hawaii District Land Office (HDLO) was contacted by KSBE to determine what needed to be done to cancel the easement and remove the hotel footings from the easement area

KSBE is in the process of developing the former hotel site as part of its Kahalursquou Ma Kai Educational and Cultural Complex (Project) The plan called for the hotel to be demolished and the footings leveled with the surrounding floor of the tidal pooi area KSBE was responsible for all permitting and environmental compliance The process was lengthy but finally completed in late 2018 (see photos attached as Exhibit B)

Since the purpose of the easement was to accommodate the encroaching footings of the

BLNR Cancellation of GL S-5963 Page 3 February 22 2019 Kahaluu North Kona Hawaii TMK (3) 7-8-013042

hotel structure which have been removed and KSBE does not plan to utilize the easement area for its project staff is recommending cancellation of the easement

RECOMMENDATION That the Board

1 Authorize the cancellation of Non-Exclusive Easement No S -5963 under the terms and conditions cited above which are by this reference incorporated herein and subject further to the following

A The standard terms and conditions of the most current mutual cancellation of easement form as may be amended from time to time

B Review and approval by the Department of the Attorney General and

C Such other terms and conditions as may be prescribed by the Chairperson to best serve the interests of the State

Respectfully Submitted

andace Ma in Land Agent

APPROVED FOR SUBMITTAL

r~v8 D Case Chairperson

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