The slowing national economy and real estate downturn have raised concern that developments planned near train stations along Honolulu's proposed $3.7 billion elevated commuter rail line could be delayed or canceled.

Texas-based Hunt Development Group recently opted out of a tentative agreement to develop 300 acres near a planned train station at the new University of Hawai'i-West O'ahu campus.

Several other developers involved in potential projects near rail stations say they are moving forward with their plans.

Still, the souring economy and credit crunch could affect their timing.

City planners hope to break ground on the Kapolei-to-Ala Moana commuter rail line late next year, and expect many of the 19 stations will attract residential and retail development.

Michael Schneider, managing partner of InfraConsult LLC, which provides management support on the train project, said transit-oriented developments could be delayed by an economic slowdown. However, it's more a question of when, not if, developers respond to opportunities near train stations, he said.

"(In) the midyears between 2010 and 2020 who knows what's going to happen," Schneider said. "Historically since the 1850s, the development of railroads has spurred the development of communities.

"That's been proven in almost every community where a fixed system ... that developers can rely on, has resulted in development activity."

Proponents of the 20-mile rail line envision stations, especially those in East Kapolei, becoming hubs for development. They see the stations growing into new high-density population centers that will slow the suburban sprawl that has covered much of West O'ahu.

Transit-oriented development is especially key for three planned stops between Kapolei and Leeward Community College, which are in the middle of what are now primarily empty fields.

The plan is for those fields to turn into communities by the time the train makes its first stop four years from now. If things don't go according to plan, there could be little reason for trains to stop at those stations when the line first opens.

That could be politically embarrassing for city officials who decided to start construction of the train in undeveloped West O'ahu rather than in urban Ho-nolulu. It also could mean fewer riders than anticipated, at least initially. That would mean lower fare collections, which could require greater subsidies to finance train operations.

But the timing of transit-oriented development is largely out of the hands of city officials. Private companies will determine the pace of development.

300-ACRE DEAL

Hunt Development Group was in line to buy 300 acres near a train station close to UH-West O'ahu for about $100 million. Hunt sought to renegotiate because the original terms of the deal weren't in line with current financial and real estate markets.

The university, which was relying on the sale to help fund a new campus, still plans to break ground in January and open a scaled-down campus by fall 2010. UH-West O'ahu spokesman Ryan Mielke said the university now is focused on rezoning and selling a separate 50-acre parcel that could raise about $40 million.

"There are developers that are looking at it. We have had interest," Mielke said.

Even if that smaller campus opens as scheduled, it's unclear what will happen with the 100 acres Hunt had planned to purchase. Hunt had planned to build 2,340 residential units coupled with commercial developments that could have provided an economic boost for the area.

Despite the economic turbulence that led to Hunt's decision to pull out, other developments along the train route are moving forward.

Fort Worth, Texas-based homebuilder D.R. Horton is developing East Kapolei's massive Ho'opili planned community. The company's shares are down 49 percent this year; it slashed its quarterly dividend in half; and recently posted its fifth straight quarterly loss.

Still Mike Jones, president of D.R. Horton's Schuler Division, said the recent economic troubles will not affect the timing or scale of development planned for two Ho'opili train stations. Current plans include beginning construction in 2011 or 2012. Completing the project could take another 20 to 30 years and involve the building of 10,000 to 15,000 homes, plus schools and parks.

The company wants to have commercial or residential development near at least one of two nearby stations in 2012, Jones said.

"It depends on when permits and zoning happen, but that's kind of the target date at this point in time," he said. "We're moving along. Obviously, it's a long-term project."

At Chicago-based General Growth Properties Inc., which owns Ala Moana Center and the planned Ward Neighborhood project, shares of the real-estate investment trust have plunged 85 percent this year amid concerns the company may be unable to make payments on its more than $27 billion in debts.

Analysts speculate the company may need to merge or sell assets to keep current on its debt payments.

Jan Yokota, General Growth's local vice president of development, said the company is committed to its Ward Neighborhood plan, which eventually would replace everything that exists on its Ward land today — including Ward Warehouse, Ward Centre, Ward Entertainment Center and the IBM Building — with medium- to high-density housing, retail and open space, all within walking distance of a transit station.

The train station near Ward Avenue would not open until sometime near 2018, which is when the system is scheduled to begin full operations.

"It's a long-term plan and we're committed to that vision," Yokota said. "Overall, it will span at least 20 years."

FUTURE KROC CENTER

Other developments at the Kapolei end of the transit system also are proceeding. That includes construction of the Salvation Army's $103 million Ray and Joan Kroc Corps Community Center. The community center will have an aquatic facility, a multipurpose gym, a large fitness center, and a worship and performing arts theater, among other facilities, and is expected to open in early to mid-2010.

The train's first stop will be next to the Kroc Center. The second stop will be near UH-West O'ahu and Ho'opili, while the third stop will be in the heart of Ho'opili.

Next to the Kroc Center are several Department of Hawaiian Home Lands developments, including two housing projects. That includes East Kapolei I, where construction of about 103 homes is expected to begin early next year. A total of 403 homes are planned. Construction on the first phase of East Kapolei II is expected to begin sometime in 2010. About 1,000 homes are planned for the development.

On the makai side of the planned UH-West Oahu campus, Tampa, Fla.-based Hawai'i DeBartolo LLC plans to build Ka Makana Ali'i, which will be a 1.6 million-square-foot regional shopping center on DHHL lands. DeBartolo also plans to put up to 300 hotel rooms in two towers. A DeBartolo spokeswoman said the company is going forward with the project, but could not comment on when the mall would open for business.

DHHL, which opened a new 50,000-square-foot headquarters in Kapolei earlier this year, said its projects are going forward as planned.

"There is talk about money being tight and the big guys are going to feel it in terms of being able to borrow," said DHHL spokesman Lloyd Yonenaka. "I don't know how it's going to play out, but right now there aren't any changes.

"The stuff that we are touching we feel pretty confident about now."

'EWA END CRITICAL

Continuing to move forward on the 'Ewa developments along the train line is more crucial because the city plans to start service at that end, and many of the planned stops are now in the middle of empty fields.

City officials decided to start building the train at the 'Ewa end in part because they prefer placing the train's maintenance yard between Leeward Community College and Waipahu High School. Building toward 'Ewa, rather than toward town, also requires less displacement of existing homes, businesses and utility lines.

"The construction phasing plan to begin at the maintenance and storage facility site and proceed westward takes advantage of the fact that construction along Farrington Highway and in West O'ahu will not require significant utility relocations and thus can begin quickly," said Mark Scheibe, deputy project manager for city contractor Parsons Brinckerhoff in an e-mail.

However, that strategy also carries with it the risk that the first train stations could have few nearby developments, at least initially. It could pay dividends in the long term if developers succeed in building transit-oriented developments along the train's route, said Peter Flachsbart, who teaches urban and regional planning at the University of Hawai'i.

The undeveloped East Kapolei area is ripe for the development of moderate- to high-density, mixed-use, walkable communities that can generate greater train ridership, he said.

"There's a short-term risk that there won't be any passengers around those stations, but it's a good risk," Flachsbart said. "If you do the (transit-oriented development) right, so that you have built-in ridership for those stations, in the long-term that will pay off."

In contrast, areas already packed with commercial buildings, such as Salt Lake, have less opportunity to design new developments around train stations, according to a February 2007 report by Parsons Brinckerhoff. Salt Lake, which would have two stations, is already built out, or contains land controlled by the military.

The scope and timing of projects near transit stations hinge not only on the economy, but on the availability of favorable zoning rules and landowner incentives such as property tax breaks, revenue bonds, and tax increment financing, said UH's Flachsbart. The level of tax subsidies the city could provide land owners and developers also could be hampered by a slowing economy.

"I guess the subsidies would have to be greater in a down market, but that's going to be harder for the city because their property tax revenues might be down, too," Flachsbart said.