The state's Kaka'ako redevelopment agency is closer to finalizing plans to operate Kewalo Basin using a private contractor, though tenants of the commercial small-boat harbor still have concerns about proposed changes that include opening the harbor to recreational boaters.

The Hawai'i Community Development Authority held a public hearing yesterday on proposed harbor rules that drew testimony from 16 people — mostly harbor users who opposed parts of the plan.

Transferring management of Kewalo Basin has been in the works for more than a year after the state Department of Transportation sought to quit operating the harbor because the HCDA owns the property.

Initially, the development authority proposed spending $14.1 million to repair unusable slips and add new restaurants, a convenience store, fuel station and other improvements financed by a 100 percent increase in slip rents plus maintenance fees.

An outcry from harbor users as well as several stakeholder meetings led to five revisions of the proposed plan that included scaling back improvement plans, eliminating maintenance fees, lowering requirements for insurance and minimum sales, and creating two-tier slip rents.

Under the plan's current version, the harbor's roughly 80 tenants would pay 12 percent more for their slips, while rates for about 45 slips in disrepair would double after they are renovated and returned to use.

Renovation work would focus on slip repair roughly estimated at $5.5 million.

Bryan Ho, an attorney representing a charter boat operator with four vessels at Kewalo Basin, said boater groups and the agency have worked hard to reach compromise, though some issues remain unresolved.

"I think we've made tremendous progress," he said.

Still, many harbor users — primarily fishermen and a mix of charters for fishing, parasailing, tours and scuba-diving — oppose allowing non-commercial boaters into the harbor.

Richard Kuitunen, an HCDA asset manager, said the mixed-use provision, which would allow pleasure craft including yachts provided that owners don't live on board, is intended to facilitate maximum slip occupancy.

Harbor tenants argue that Kewalo Basin is too dangerous during rough conditions to mix recreational boaters with commercial traffic.

DeRego said he also fears that recreational boaters able to pay higher rates could ultimately displace commercial users from the harbor.

Tom Hahn, a director of the Hawaii Longliner Association, said there's enough demand for longline fisherman to use vacant space at Kewalo Basin once vacant slips are repaired.

Some Kewalo harbor users still question the agency's justification for doubling rates for repaired slips, arguing that it's unfair to charge more for improvements that should have been made earlier by DOT as routine maintenance.

"If given good reasons for a rate increase, I could swallow it," said Gary Dill, owner of the commercial fishing boat Imua. "There is no justification for any increase in rent."

Existing rents for commercial fishing boats up to 75 feet is $5 per boat foot and would rise 12 percent to $5.61 per boat foot under the agency's plan. Rates for charter boat operators are twice that of commercial fishers and would also increase 12 percent. Rates are higher for boats longer than 75 feet.

Rent for newly renovated slips would be $10 per boat foot for commercial fishing boats up to 75 feet, and $20 per boat foot for charter boats up to 75 feet.

The agency said the higher rates for new slips are comparable to harbors such as Ko Olina Resort & Marina and Keehi Marine.

However, Kewalo Basin's proposed rates are above rents at state harbors in Hale'iwa and Wai'anae that accommodate commercial boats.

The last time rents increased at Kewalo Basin was 1996, according to HCDA.

Recently, the Transportation Department said it cannot make capital improvements to Kewalo Basin because it does not have jurisdictional authority over the harbor.

Ownership of the harbor was given to HCDA in 1990 by the Legislature to allow comprehensive redevelopment of the Kaka'ako peninsula.

Gov. Linda Lingle's administration included $5.5 million in a DOT special fund this year to pay for Kewalo Basin harbor repairs, but the HCDA said the money will not be spent because of DOT's position on jurisdictional authority and needs at other DOT harbors.

The development authority expects to assume harbor operations Sept. 1 and anticipates selecting a private company to handle day-to-day management for a fee.

Implementing new slip rates and other rules for the harbor is subject to approval by the agency's board of directors, review by the state Small Business Regulatory Review Board and approval by Gov. Lingle.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.