Sales of the residential condominiums are expected to begin later this year, with units averaging about $500,000 and one-bedroom units starting in the high-$200,000 range, said Kathy Inouye, chief operating officer of Kobayashi Group LLC, one of the developers of the project.

Other than the auto dealership, there will be no commercial space on the property.

Construction will begin at the end of 2005 and is scheduled to be completed by December 2007, Inouye said.

Pflueger Group LLC has joined with affiliates of local developers The MacNaughton Group and Kobayashi Group LLC to form PMK Development LLC to develop the project, called Capitol Place. The project will be located on the border of the Capitol District, which includes Washington Place, 'Iolani Palace and the state Capitol.

The garage will include at least 100 public stalls charging municipal rates for 12 years, as well as additional stalls for long-term rental at market rates, she said. Developers are trying to add more public stalls, she said.

The site, which has been a municipal parking lot for almost 30 years and is used heavily by people visiting nearby District Court, has 202 metered and 10 handicap stalls. The site will remain a parking lot managed by AMPCO until construction begins.

The city sold the property to Pflueger earlier this year for $10.5 million after several previous attempts to redevelop the area failed. Pflueger plans to move to the site its dealership on Ala Moana, where landowner Kamehameha Schools has redevelopment plans.