Duke Kahanamoku Lagoon — the neglected, smelly, artificial pond colonized by stinging jellyfish — once again would become an inviting saltwater swimming hole on Waikiki Beach under plans being advanced by longtime lagoon steward Hilton Hotels.

The 49-year-old state-owned lagoon attached to Hilton Hawaiian Village would undergo an estimated $13.5 million restoration by Hilton.

Proposed changes include dramatically upgrading and maintaining water quality in the lagoon while trimming its shore with new sand, landscaping, benches, drinking fountains, lighting and a boardwalk.

"Restoring the lagoon represents an investment in Waikiki and Honolulu now, as well as to future generations who can enjoy the area with their families and swim in the lagoon too," said Gary Seibert, area vice president and managing director of Hilton Hawaii.

Hilton's lagoon restoration plan was detailed in a July draft environmental assessment filed with the state.

The proposal is simpler and less commercial than a previous plan the company pursued in the late 1990s to convert part of the lagoon into an aquatic adventure in which paying visitors would be towed underwater behind a self-propelled raft through winding channels stocked with marine life.

The private recreation park idea drew some criticism as being too Disneyland-ish, but overwhelmingly won support and approval in 1997. Three years later, after costs escalated to more than $20 million, financing problems led Hilton to abandon the project.

The current initiative to restore the lagoon is required by the city as part of approvals for Hilton to build its Waikikian timeshare tower nearby.

The city Department of Planning and Permitting approved Hilton's lagoon restoration plan last October, which gave Hilton until October 2007 to finish the upgrade.

Hilton still needs a variety of permits, but anticipates having them ready by the end of this year, and the project completed by the end of next year.

The lagoon was built in 1956 by industrialist Henry J. Kaiser, who began what is now Hilton Hawaiian Village. The lagoon, created with excavation and fill material, was developed as part of a bigger beach enlargement project, which wasn't completed and resulted in lagoon ownership passing to the Territory of Hawai'i.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.