KAILUA — The federal government is poised to spend $5 million on bird habitat restoration in Kawai Nui Marsh, but the project is in jeopardy because of an unsettled ownership issue between the city and state.

The state Department of Land and Natural Resources and the Army Corps of Engineers' project focuses on the construction of about 40 acres of ponds behind Castle Medical Center and along Maunawili Stream on state and city land.

But since the Corps is partnering with the state, it can't build on city land, said Corps project engineer Les Asuka. When the project was announced eight years ago, the city and state were discussing transfer of the land to the state.

The 11-pond project also includes restoring 2,800 feet of stream bank habitat, installing waterbird protection fencing, implementing a predator-trapping program, controlling vegetation and assuring a water supply.

"If the state does not acquire rights to the land (fee acquisition or long-term easement) ... the project cannot be constructed," Asuka said.

Both the city and the state say they want to resolve the issue.

The city said it is ready to transfer the property, and DLNR said it wants the control over resource protection and enhancement there.

"Then there's the issue of flood control," said Peter Young, director of the DLNR. "We want to have a discussion on who's most appropriate to handle that responsibility."

The Army Corps said it expects to receive $700,000 in initial construction funds in 2006 and that if the land is not acquired, the funds could be withdrawn and given to restoration projects on the Mainland. It may be possible to build part of the project on the state land, but that will require starting over and could take another eight years and added costs, Asuka said, adding that the ecosystem would also lose if this project stalls.

"The cost isn't in dollars, but it's in species lost," he said.

Young said the department will pursue options to get the project moving.

"What we're trying to do is encourage either a license or easement for our Forestry & Wildlife Division to go in and work on the habitat restoration," Young said, adding that Forestry & Wildlife will manage the ponds.

Laverne Higa, director of the city Facility Maintenance Department, said the city can draw up transfer papers once it concludes title searches for easements along the Oneawa Canal.

Under the city's proposal, the city would retain the model airplane field and Kawainui Canal between the levee and the Coconut Grove homes, Higa said. The state would receive the levee, the marsh and Oneawa Canal, she said.

Higa, who has been working on marsh issues since 1989, said she's hoping the transfer will be completed this year. DLNR, she said, is the right agency to manage the marsh because its wildlife and parks divisions are suited for passive parks, whereas the city operates active parks.

For decades, the city has viewed the 830-acre marsh as a flood-control mechanism with possibilities for recreational, cultural, archeological, religious, educational and wildlife use. Some of those uses exist there today, but many believe that the full potential of the marsh has not been realized. Numerous groups and thousands of volunteers have conducted marsh projects, ranging from restoration of a heiau and cultural sites to cleanups.

Kawai Nui is the largest remaining wetland in the state. It has been identified by the U.S. Fish and Wildlife Service as a primary habitat for the endemic and endangered Hawaiian stilt, moorhen, duck and coot. This year, the Ramsar Convention on Wetlands designated the marsh a wetland of international importance. It is only the third such designated wetland in the United States.

Supporters have fought since the 1960s to save the wetland from development because of its cultural and historical value. Historical sites there include Na Pohaku O Hauwahine rock formation, Ulupo Heiau, Holomakani Heiau and taro lo'i.

Donna Wong, executive director of Hawai'i's Thousand Friends, said she can understand DLNR concern about flood control but that a bigger concern is that no entity is overseeing the numerous projects taking place in the marsh.

"The main problem is, without somebody having definite control, there's no coordinated oversight, and that's why you see these disjointed efforts," she said.

The city owns the wetland and the state has about 200 acres on the periphery of the marsh, said Martha Yent, state parks interpretive program supervisor. In March, the governor assigned 166 acres controlled by the Land Division (a money-making agency for DLNR) to state parks.

The parks division was pleased to receive the property but has little staff and no money, so will have to depend on public support, she said.

"The community groups are going to be the critical element to making things happen," Yent said.

OTHER KAWAI NUI PROJECTS

In conjunction with the state and federal $5 million pond restoration project, the city and private groups are planning more than $1 million in construction in Kawai Nui Marsh: