A state agency is fighting to allow residential development on the Kaka'ako waterfront, in defiance of a bill the Legislature recently passed almost unanimously.

The Hawai'i Community Development Authority yesterday voted to urge Gov. Linda Lingle to veto the bill that would prohibit housing in the area, such as the two high-rise condominiums proposed last year by developer Alexander & Baldwin Inc.

House Bill 2555 passed with almost all lawmakers from both the House and Senate voting in favor. The lone no vote came from Rep. Joe Souki, D-8th (Wailuku, Waiehu).

The agency's action was not an attempt to salvage the A&B plan, which the HCDA terminated yesterday, but to keep alive the possibility of using the land for housing.

"I think prohibiting all residential (land use in Kaka'ako makai) throws the baby out with the bath water," said Ted Liu, an agency board member and director of the state Department of Business, Economic Development and Tourism.

The agency's attempt to invalidate HB2555 drew objections from some residents and legislators.

"If you build private residential — even if it's leased — you are still restricting public lands to private use," said Michelle Matson, a member of the group Save Our Kaka'ako that lobbied for HB2555 and favors more park space and other public improvements for the area.

The agency emphasized that part of its mission, established by the Legislature in 1976, is to create below-market housing, and that the roughly 200-acre Kaka'ako peninsula mostly owned by the state is a good opportunity for that.

ADVISORY COMMITTEE

Eliminating the option to develop housing in the area would be a mistake because Hawai'i faces a critical lack of workforce housing, Liu said.

A&B's project was required to have 20 percent, or about 125 units, of moderately priced condos under agency rules.

Ala Moana resident Nancy Hedlund bristled to hear that the state's affordable housing shortage would be helped by allowing homes on such valuable land so close to the ocean.

"I think it is a specious argument," she said.

Daniel Dinell, HCDA executive director, said he hopes to build a broader community consensus on how the industrial area should be remade now that the A&B plan is dead.

A key part of this redevelopment initiative will be forming a community-based advisory committee to determine what constitutes the best use of public waterfront land.

"The decks are cleared," Dinell said. "We want to have all options on the table, and at the end of the day do what's in the best interest of the area and the people of Hawai'i."

Dinell said the preference is to have the 10- to 15-member advisory committee suggest whether residential use is a desirable use in the area, though the final decision would be up to agency directors.

"We want to trust wherever the community will take us," said board member Michael Goshi, a principal of Design Partners Inc.

An advisory committee has not yet been created, but Dinell said the agency is working to establish the team representing community groups, professional organizations, economic and labor organizations, area landowners and tenants, environmental organizations and the agency.

Ron Iwami, a Honolulu Fire Department captain who lives in Manoa, said he supports the advisory committee initiative, but is concerned about the agency asking Lingle to veto HB2555 and allow residential development in Kaka'ako makai.

"To me, the people, through the Legislature, have spoken," he said.

A two-thirds majority would be needed to override a veto.

Lingle spokesman Russell Pang said the governor is still reviewing possible action on the bill. Lingle has until June 26 to notify the Legislature of her intent to veto the bill. If Lingle does not sign or veto the bill, it would become law without her signature on July 11.

The bill also would prevent Kamehameha Schools from building residential units on land it owns between Kewalo and Honolulu harbors makai of Ala Moana, the area under HCDA's control.

WORKFORCE HOUSING

Kamehameha Schools is contemplating adding workforce housing to a planned bioscience office complex on land it owns in the area.

Bob Oda, Kamehameha Schools regional planning project manager, attended yesterday's meeting but did not address agency directors.

In an interview after the meeting, Oda said the trust did not testify for or against HB2555. He said that after the agency amended its land-use rules in September to allow residences in the area, the estate's development partner KUD International suggested adding workforce housing to the bioscience complex. Oda added that the project would go forward with or without residences.

Liu expressed concern that prohibiting residential use on Kamehameha Schools land could constitute a down-zoning that exposes the state to liability.

Another provision of HB2555 would ban the HCDA from selling state land. But the authority yesterday voluntarily complied with this portion of the bill by adopting a policy to not sell land on the Kaka'ako peninsula.

Sen. Gordon Trimble, R-12th (Waikiki, Ala Moana, Downtown), questioned the strength of a policy banning state land sales in Kaka'ako makai, and suggested the agency could reverse its policy at some point, perhaps after opposition to the controversial A&B plan fades.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.