Texas developer Ken Hughes yesterday tried to advance his ambitious development plan on state land at Honolulu Harbor after the attorney general rejected his idea to sell fee-simple condominiums on the site diamondhead of Aloha Tower at piers 5 and 6.

Hughes briefed the state Aloha Tower Development Corp. on his latest revision to the project's initial phase that now includes selling 300 leasehold residential and vacation ownership condos.

The updated Phase 1 plan also contains 75,000 square feet of retail and restaurant space, a public pedestrian promenade along the water's edge and 850 parking stalls, nearly 500 of which would help cure the parking shortage plaguing Aloha Tower Marketplace.

Melissa Pavlicek, chairwoman of the agency overseeing redevelopment of state property in the area, expressed concern that the residential and vacation-condo element of the plan could spark a public backlash similar to what happened recently to a different plan to sell condos on state waterfront property in Kaka'ako.

"We want to learn from the experience of Kaka'ako," she said.

But Hughes said his project isn't comparable to the recently aborted Kaka'ako project because piers 5 and 6 are part of a harbor that restricts public use on the water, and because his plan has been in public view since early 2003. The state also is no longer being asked to sell land.

"This is different," he said. "I think we've comfortably vetted it."

KEY DIFFERENCES

Michelle Matson, a staunch opponent of the Kaka'ako plan that included two high-rise condos, an expanded park, hula amphitheater and commercial space, supports Hughes in his effort.

"I believe he wants to do the best thing for Honolulu," she said. "(The project site) is more interior harbor space. It's not on a peninsula where there is potential for significant open space for public use."

Matson said she also likes the project's pedestrian promenade and relatively low-density mid-rise buildings rising up to 130 feet.

One major change in the Hughes plan, called Pacific Quay, is leasing the site from the state for 65 years.

In late 2002, the agency issued a request for proposals seeking a private developer to lease and improve the site, which is now mostly a parking lot.

Hughes responded in early 2003 with a plan to develop 250 residential-loft rentals and a 250-room hotel, but later eliminated the hotel and said rentals would not be economically feasible.

The developer in 2004 sought to instead sell 550 fee-simple condos in partnership with the agency, which was promised a share of sales proceeds. But the agency didn't have the power to sell land, and the Legislature in 2005 failed to pass a bill that proposed giving the agency such authority.

Last September, Hughes responded with an idea for the state Board of Land and Natural Resources to use its land-auction powers to sell his planned loft-style condos, but the attorney general issued an opinion this year nixing the idea.

Yesterday Hughes said he is convinced he can sell leasehold condos. Some of the 300 planned condos would be aimed at residential buyers, including local residents. Other units would be sold as fractional vacation ownership condos, essentially a longer-term version of time-share where owners typically have use of their unit for four weeks to three months.

SMALL HOTEL POSSIBLE

Perhaps 60 to 80 units of the project may be dedicated as a boutique hotel that would provide services to condo owners and add some cachet to the development, said Jorg Mast, a principal with Hughes Development LP.

Hughes asked the agency to consider negotiating a one-time payment for 65 years' worth of lease rent as a way to alleviate the need for condo buyers to periodically pay the state. No public money is being sought to finance the project's initial phase.

An agency subcommittee plans to study the proposal. The agency could vote on whether to proceed with the project as early as its next meeting, this month.

Hughes said he is close to finalizing private financing for the roughly estimated $300 million project he hopes he can begin by the end of the year.

"We are ready to start this project," he said.

ENVISIONING PHASE 2

Hughes also said he hopes to follow the first phase with a previously proposed additional phase at piers 10 and 11 that would include a rebuilt cruise terminal building and 250-room business hotel designed with an iconic profile in the shape of a cruise ship.

The piers 10 and 11 plan also includes space for state Department of Transportation offices, some retail space and about 800 parking stalls.

Other second-phase plans are to remove parking spaces from Irwin Park and continuing discussions with Hawaiian Electric Co. to move its downtown power plant to make room for a park.

If successful, the Hughes project would largely complete the state's goal to redevelop the area from piers 5 to 14.

An original developer selected by the agency in the late 1980s had a $700 million plan that included a hotel, festival marketplace, condos, office building and ferry terminal on land leased from the state.

But the project stalled in the early 1990s after completion of the $100 million Aloha Tower Marketplace that has struggled in part because planned phases with more parking were not built.

The Aloha Tower Development Corp. regained development rights for the land in 2000 and has been trying to find someone to finish redevelopment.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.