State officials hope that a 42-year-old deed restriction on Aloha Stadium property could be lifted within months — a move that could free up hundreds of millions of dollars needed to rebuild or renovate the aging structure.

The state, which is grappling with an estimated $1 billion budget deficit through June 2011, doesn't have the financial resources to renovate the stadium or build a new one. An alternative solution would be to partner with a private developer to build retail, office or residential space near the stadium and use the revenue generated to pay for updating the venue. But to do that, the deed restriction must be lifted.

"We would welcome that, because I think it opens up the door to do business with the private sector," stadium Manager Scott Chan said. "We'd be foolish not to see what (private developers) would say, but we can't even do that now because of the (deed) restrictions."

The restriction was put in place when the U.S. Department of the Interior sold the city 56 acres in 1967 for $1.5 million.

The city later gave that acreage along with the rest of the 111-acre site to the state for stadium construction in 1970.

Last year, the National Park Service and the state signed a memorandum of understanding establishing a process to remove the deed restrictions if the state dedicates another 56 acres for recreational use. Since then, officials have been quietly working to implement the agreement.

The issue is generating attention in part because of the stadium's continued deterioration. The stadium is in need of repair, with rust damage, structural problems, a shortage of toilets and noncompliance with the Americans with Disabilities Act among its shortcomings. Extending the useful life of the stadium by 20 to 30 years could cost $214 million, according to a 2005 state study. Building a new stadium would cost at least $225 million.

"The idea is that commercialization would allow the production of revenues, and the revenues would pay for whatever it is we need to do there," said state Comptroller Russ Saito.

The deed restriction allows hosting the swap meet, concerts and certain other events deemed "recreational" at the stadium. However, it prohibits developing the property for strictly commercial enterprises.

The state hopes the deed restriction can be lifted within months. The state then would solicit development proposals from the private sector, Saito said.

MULTIPLE OPTIONS

Among those pushing to lift the restrictions is state Senate Majority Leader Fred Hemmings, who helped broker last year's agreement with the National Park Service. Whether the state sells the property to finance a new stadium elsewhere or redevelops the current site would depend on proposals submitted by private developers, Hemmings said.

One alternative is to develop a major shopping center that could subsidize a new stadium at the current site, he said.

"This is a way that we could get a liability, which is Aloha Stadium, turned into an asset," Hemmings said. "It would not only take it off the state's books, it would turn it into a revenues-generating facility, and the public would have the benefit of a new stadium."

Other past stadium proposals have included tearing down the 34-year-old facility and replacing it with a new stadium in West Oahu. The new stadium could be financed by selling the Aloha Stadium site in Aiea.

If the state opts to renovate Aloha Studium in conjunction with commercial development of the property, it wouldn't be the first to do so.

Gillette Stadium, home of the New England Patriots, is co-located with Patriot Place, which is a 1.3-million-square-foot development that includes retail, restaurants, hotel rooms and other commercial uses. Similarly, it's envisioned that a recently built stadium for the Dallas Cowboys will be surrounded by housing, hotels, restaurants and stores. Many of those developments are now on hold because of the economic recession.

The pairing of commercial development with stadium construction is being driven in part by tight government coffers and resistance to increased taxes to fund stadium construction, said Denver Broncos owner Pat Bowlen.

"The idea of public money to build stadiums has gone away," said Bowlen, a former Hawaii restaurateur. "That's not going to happen in Hawaii, and it's probably not going to happen anywhere else."

Aloha Stadium's location is an ideal spot for a stadium/mixed-use development, Bowlen said.

"It's a very unique location — it's on the convergence of a bunch of freeways (and) it's obviously, from the standpoint of high-rise residential condos, a spectacular site," he said. "Also, the west side has really grown up out there, and there's a lot of potential for retail development to service all the development that's gone on on the west side of the stadium."

POTENTIAL ISSUES

Just how the surrounding Salt Lake and Aiea communities react to plans to redevelop Aloha Stadium remains to be seen. Community acceptance will depend on the details of what project emerges and whether concerns about traffic and construction impacts are addressed, said Salt Lake resident and former area Neighborhood Board member Mark Taylor.

On the surface, a deal that reduces the state's costs of renovating or building a stadium is good for taxpayers, he said.

"We've got to be creative in looking at how we can address the aging of that facility and ultimately renovating and replacing it, and if we can find a way to do it that doesn't involve a huge infusion of tax dollars, then it benefits everybody, not just in that area but on the whole island," Taylor said.

The state Department of Accounting and General Services has submitted a tentative list of potential lands that could be exchanged to lift the deed restrictions, said David Siegenthaler, Pacific/west region program coordinator for the federal lands-to-parks program. However, the state has yet to submit a formal proposal, he said. The list of properties being considered was unavailable from either the federal government or the state last week.

Under the terms of the current agreement, the state needs to submit a formal proposal to the federal government identifying the lands that will be converted into new public parks. The value of those lands must equal the highest potential commercial value of the 56 acres of restricted Aloha Stadium land.

The state also must commit to having those new park lands open within three years after any agreement is reached.

The conversion process will include an environmental assessment and a public information campaign, Siegenthaler said. That process will start once the statesubmits a formal proposal.

"As soon as the state has some idea of what they're actually going to be offering, we'd encourage them to start those public discussions as soon as possible," Siegenthaler said. "But a lot of the details on how they do that are up to the state."

Another consideration is that now may not be the best time to seek commercial partnerships.

"If (the state)wants to do it at no cost to the state, which is the ultimate goal, then is the environment conducive to that?" Saito said. "If you go with a private-public partnership in development, that private partner has got to have some pretty good financial conditions before they're willing to step forward with anything."