HILO, Hawai'i — The long-dormant plan to develop a hotel and up to 1,500 homes at Punalu'u is moving again, and it has stirred emotions in the isolated community. People want jobs and housing, but some are afraid the development would change the rural flavor of that part of Ka'u forever.

Supporters and opponents of the $850 million project by Sea Mountain Five LLC disagree on many points, but they agree on this: The close-knit community around Punalu'u is unlike any other in Hawai'i, and it won't be quite the same if the project is built.

For some, that would be a good thing. They point out the golf clubhouse, restaurant and retail shops at Punalu'u have long been closed, and the aging water and sewer systems that serve the area have been so neglected that they are in danger of failing.

The new project "will change the face of Punalu'u, and hopefully it will change it for the better, because right now Punalu'u is in a shambles," said Guy Enriques, who is part of a group of residents negotiating with the developer to try to secure a package of community benefits worth more than $2 million.

Enriques said he wants a community benefit fee imposed on real estate sales and hotel room rentals in the project, and wants that money used to improve the ailing local schools, upgrade police protection and help the local hospital.

"There's a lot of people who feel the same as we do, that the people are suffering, and they want to see change, and they want something to happen," he said. Residents drive for hours to reach hotel jobs in Kona, and they want to work closer to home, Enriques said.

"If you've got kids in school, you want something better for the kids. If you are one of the older people, you want a hospital you can trust, so I believe ... the people are looking for something," he said.

Others worry that the project might change things for the worse. Some contend that a construction boom in similar luxury housing projects on other parts of the island has hurt local residents.

"We see what happens over there in Kona — people have to work two jobs just to meet the cost of living because the rich have come in and left our local people having to work 12 hours a day just to live here," said Ruth Marie Bass, an adult-education teacher in Ka'u who has attended many of the meetings on the Punalu'u project.

Bass also worries that in the end, the developer may not deliver much in community benefits. She said she hasn't seen any signed commitments yet.

"Jobs are important in Ka'u, but what good are jobs if we don't have affordable housing for our families? Resorts are clean industries and it can be economically sound, but what is this going to mean for us? It's going to mean a massive increase in population, and tremendous increases in our property taxes," she said.

According to the 2000 census, Ka'u had fewer than 6,000 people in an area 50 percent larger than the entire island of O'ahu. Punalu'u is almost midway between the old plantation villages of Pahala and Na'alehu, which together had fewer than 2,500 residents between them at the time of the census.

The Sea Mountain development would in effect create a new community of about 1,500 condominiums and single-family homes and 300 hotel rooms, growing into a population hub that could be larger than the two existing villages combined.

The project is expected to create more than 500 permanent jobs when it is completed in 2015. However, with lots projected to be priced from $264,000 to $770,000, the project would also introduce a new kind of wealthy resident unlike the farmers, ranchers and hotel workers who live in the area now.

Sea Mountain has been a source of controversy in Ka'u before. C. Brewer Ltd. in 1972 completed the golf course, restaurant and retail space, along with about 75 condominiums and some single-family home lots, and in 1988 had the property rezoned to allow for more commercial development, home sites and two hotels. None of that was ever built, however.

The unfinished development was sold to Japanese investors for $35 million in 1989, but Ka'u residents sued to challenge a special management area permit the county had issued for the project.

With the decline in the Japanese economy, the property was resold for $3 million in 1994 to SM Investment Partners, a partnership formed by Robert Iwamoto and Clyde Kaneshiro, and affiliated with Roberts Hawai'i.

Last year the Sea Mountain Five partnership announced it was reviving the project, and plans to buy the property from SM Investment provided it can obtain the special management area permit and other permits it needs to develop the site.

Last week Sea Mountain announced it had entered into a partnership with environmentalist Jean-Michel Cousteau and Cousteau's Ocean Futures Society to plan an environmentally friendly and culturally sensitive project on the site.

Environmental issues likely will be critical because the project is planned next to a nesting area for endangered hawksbill turtles and threatened green sea turtles. One stand of trees on the site is also part of the habitat for the endangered hoary bat, according to a draft environmental impact statement filed with the county in June.

There are also 32 archaeological sites identified on the property, including ancient burials and a heiau, and the project is being designed to avoid those sites, according to the environmental report.

One study found 30,000 or more visitors already going to Punalu'u Beach Park each month, and Sea Mountain planner and project manager George Atta said the development might actually help protect the turtles.

Atta said the developer wants to include an interpretive area where visitors to the beach could be briefed so they avoid the endangered turtles. Nothing like that is offered to visitors now, he said.

The environmental report acknowledges that runoff from the upgraded 18-hole golf course could deposit additional nutrients in coastal waters, but the report suggests that might help the turtles by encouraging growth of algae that would provide more food for them.

Another major issue is Punalu'u Beach Park, which the county now leases month-to-month from SM Investment. If the permit for the project is allowed, Sea Mountain offers in the environmental impact statement for the project to turn the park over to the county.

However, if the project is not built, the environmental report warns that "the lease for the park could be terminated and there would be no park. The roads to the park are not public roads and could be closed or gated. This would cut off shoreline access, access to the beach, the boat ramp, etc."

A community group called Ka'u Preservation has announced it intends to stop the development, and has proposed a drive to raise $15 million to $20 million to purchase the land and turn it into a "natural educational campus."

"Punalu'u is one of the last beaches in the state that has not become overshadowed by a huge towering hotel and resort complex," Ka'u Preservation states on its Web site. "And we want to keep it that way."

County Councilman Bob Jacobson, who represents Ka'u, has been pressing the county to open negotiations to obtain fee-simple ownership to 12 acres that include the Punalu'u Beach Park and the old Sea Mountain restaurant site.

Jacobson said he is also interested in the proposal to try to buy the entire site to preserve it. He said a number of residents tell him they believe the proposed development is too dense.

"It's one of the most important places in Ka'u to preserve," he said.

Reach Kevin Dayton at kdayton@honoluluadvertiser.com.