KAILUA — The federal government has ordered Coluccio Construction Co. and Kane'ohe Ranch to remove illegal fill material and restore wetlands adjacent to Hamakua Stream that were being used as a baseyard for a sewer repair project.

The action comes after community complaints against the companies during the $23 million city project to fix or replace sewer lines on Kainehe Street and Hamakua and Keolu drives.

In a press release yesterday the Environmental Protection Agency said that in February, 2005 the U.S. Army Corps of Engineers told Coluccio and Kane'ohe Ranch that fill was being placed into Hamakua Stream and its adjacent wetlands without a permit.

The state Department of Health and EPA officials inspected the site and found large stockpiles of excavated soil and rock, the press release said. By November, the equipment and stockpiles had been removed. But compacted fill material — including soil, gravel and some asphalt — was still present.

Resident Jim Lotko said he was at first motivated to try to stop the practice when he learned in 2005 that the baseyard was slated for a housing project, when years before the community had been promised a park after the sewer project was completed.

"That's what started me on this whole thing," said Lotko. "But the more that I investigated, the more I worked on this and talked to people, (my concern) predominantly is the flooding and lack of concern for the environment."

Lotko, who lives in the Windward Harbour condominium that overlooks the site, said flooding is a problem in the baseyard and on Akoakoa Street adjacent to it, and now the land manager, Kane'ohe Ranch, wants to build housing there. Lotko, 70, says his view would be obstructed if the housing goes in but more is at stake.

He said he and other Kailua residents have complained to state, city and federal agencies with little help until the EPA became involved last year.

Coluccio and the city didn't return repeated calls for comments. The city contracted Coluccio to do the work in 2002, according to the EPA.

In a written statement, Mitch D'Olier, CEO and president of Kane'ohe Ranch, said his company did not know that Coluccio had not obtained the permits as required in the agreement to use the parcel.

"When we learned it failed to obtain the required permits, we terminated our license agreement," he said in the statement. "We take the EPA findings very seriously and will hold Coluccio Construction to its original license agreement."

D'Olier said yesterday that the company is investigating the feasibility of building housing at the site once all of the illegal material is removed.

He said he has heard about the promise to build a park on the site but doesn't know who made it.

"Certainly nothing is going to happen until we go back and talk to Windward Harbour and other neighboring people," D'Olier said.

The affected area is on a remnant wetland parcel of the Hamakua wetland that is divided by Hamakua Drive. Over the years tens thousands of dollars have been spent to improve the area by government, community groups, local schools and individuals.

Kane'ohe Ranch gave up most of its ownership of the marsh so it can be preserved as a bird habitat.

The Lani-Kailua Outdoor Circle has supported the marsh restoration and helped form groups that protect it, said Paula Ress, president of the Lani-Kailua group. With recent runoff it has become apparent how important the wetland is for filtering water, Ress said.

Yet she said she also recognizes the difficulty of the sewer project and its importance to the community.

"There had to be a staging area but also they had to know when they went in there that they were really close to the marsh," she said, adding that she was glad the EPA has called for the cleanup and restoration.

Susan Miller, a nearby resident and environmental activist, said having a construction site outside one's window was very disturbing to residents who bought their homes thinking the wetland would never be disturbed.

The project on Hamakua is finished and construction equipment and material have been removed, but damage has been done and the EPA wants it fixed, said Dean Higuchi of the Ho-nolulu EPA office.

Higuchi said a decision about penalties hasn't been made, and, for now, the focus is on restoring the site.

He said yesterday that he hopes this action and other similar actions against violators are reminders that permits are required when working in a wetland.

"We're hoping the message is that anytime you think you're going to disturb a wetland with fill material you should at least double check before you begin work," Higuchi said.

Reach Eloise Aguiar at eaguiar@honoluluadvertiser.com.