A nonprofit group plans to convert a beloved, more-than-century-old hotel into workforce housing on the Big Island.

Mental Health Kokua will purchase the Manago Hotel, in Captain Cook south of Kona, with $5.5 million in affordable housing funds awarded by Hawaii County, according to a county news release.

With its sweeping views of the Pacific Ocean, the Manago Hotel was originally founded by Kinzo and Osame Manago in March 1917, according to the hotel website. It remains family run and has what is considered Hawaii’s oldest continually operating restaurant.

The nonprofit will convert the hotel into 67 studio-sized apartments. A pair of one-bedroom apartments will also be created as well as three two-bedroom units, the news release said.

The hotel’s restaurant, which received the James Beard Foundation’s prestigious America’s Classics Award last year – will stay open, although the news release didn’t say who will run it.

“Our plan is to provide much-needed workforce housing and to continue the legacy of the Manago restaurant,” Greg Payton, the nonprofit’s chief executive, said in the release.

Acquisition of the hotel’s commercial space, which includes the restaurant and a potato chip factory, is not funded by the Affordable Housing Production Program Grant, said county spokeswoman Chelsea Jensen. Instead, Mental Health Kokua will use alternative funding for that.

Mental Health Kokua serves people with mental illness and behavioral health challenges.

The Manago Hotel features a sand-colored shiplap facade, “making it one of the last commercial buildings in Hawaii to bear this finish,” according to the Society of Architectural Historians. A corrugated-metal awning “and a simple cornice with a false front parapet maintain the horizontal thrust of the two story building.”

Renovations to the hotel, which sits along Mamalahoa Highway and overlooks Kealakekua Bay, will take place once the sale closes. Grant agreements and environmental reviews need to be executed over the next few months, the county said.

Captain Cook resident Chelsea Kueffer-Dietrich said rumors have been swirling within the community that the hotel’s ownership, and the building’s use, would be changing.

In Kueffer-Dietrich’s view, the county could have done a better job keeping the community apprised as to what was happening. When subdivisions go up, there are often public presentations and signage about the number of acres, parcels and intended purpose, she said.

Jensen said a Nov. 15 county news release was shared with media outlets, stakeholders and others, as well as posted online and on county social media channels. 

Kueffer-Dietrich said she didn’t see it and instead spent hours searching the internet to find out what was happening.

“Having input on how to say goodbye to a town’s historical landmark also seems appropriate and considerate, regardless of if it’s privately owned,” she added.

The Manago Hotel sale and conversion into affordable workforce housing is one of several such projects on the Big Island. A total of seven projects stand to receive a share of over $17.3 million in funding via the Affordable Housing Production Program for Fiscal Year 2023-24, according to the county.