About 1,000 residential condominiums are part of a plan to help transform 36.5 acres of state-owned industrial land around Kewalo Basin into a more vibrant public gathering place with a hula amphitheater, restaurants, stores and a pedestrian bridge spanning the harbor channel.

The estimated $650 million proposal by A&B Properties Inc. was selected by a state agency yesterday as the best of four private developer plans competing to redevelop the area.

The endeavor is the most expensive project ever attempted by A&B, and the most ambitious on state land since a developer in the late 1980s tried to remake the area around Aloha Tower in a plan that wasn't completed and failed financially for the state and developer.

Stan Kuriyama, A&B Properties chief executive officer, said the local firm tried to balance the commercial and public elements of the project, and believes that it best fulfills the state's vision to replace warehouses, base yards and industrial maritime uses with an urban village where residents can live, work and play.

Including residences in the redevelopment plan is viewed by the state and developers as necessary to provide a more attractive potential return on the huge investment. But selling public land for residential development has generated some controversy.

"I don't like the fact that they're building condos," said Anthony Perez, a 22-year-old Waikiki resident who likes to barbecue at Kaka'ako Waterfront Park. "It's going to make this one big tourist island."

Wes Fernandez, a 39-year-old Wai'anae resident who works in town and was walking in the park yesterday with his wife and son, said he expects the retail and condos will appeal more to visitors and the wealthy.

"If going be for the locals, we don't mind," he said. "It's not for the locals. It's all for the upper class."

Kaipo Bruno, a 19-year-old from Salt Lake who bodyboarded the big surf at the Kewalo's surf break yesterday, said he favored the three 20-story residential towers in A&B's plan. "They can get rid of all the old warehouses," he said. "It's going to be kind of interesting."

Still, Bruno figured tourists would probably make more use of the redeveloped area than he would.

A&B said its project will be for residents, in line with the state's vision, and will enhance public access to the waterfront and ocean. The company didn't estimate condo prices, but at least 20 percent must be "affordable" for moderate-income families under agency rules.

The state's Kaka'ako waterfront business plan calls for a "people-oriented place that helps fulfill Hawai'i's needs for public recreation, entertainment and amenities, and serves as a vibrant centerpiece for a dynamic urban community."

The state Hawai'i Community Development Authority has been working for more than two decades to reshape the poorly utilized parcels of state property prized for their location.

But the agency has stumbled in past attempts to award development rights on some of the same parcels to developers with ideas for a world-class aquarium with a marine research facility, and a 130-foot-high Ferris wheel surrounded by retail shops and restaurants.

A&B's proposal calls for 947 residential condos in three 20-story towers each connected to six-story buildings with ground-floor retail and 1,683 parking stalls 'ewa of 'Ahui Street.

A pedestrian promenade is designed to connect the project with the nearby University of Hawai'i medical school campus.

Makai of the towers would be an amphitheater for Hawaiian dance and music exhibitions that A&B envisions becoming world famous, 200 parking stalls and a restaurant, entertainment and banquet facility at Point Panic.

Boat slips would be expanded in Kewalo Harbor. Along the 'ewa edge of the harbor would be 150,000 square feet of one- and two-story dining, entertainment and retail establishments, including a farmers market, grocer and 584 parking stalls.

A waterfront pedestrian esplanade also is designed to run along the harbor's edge, which would be connected via a pedestrian bridge to the diamondhead point of Kewalo Basin anchored by dining establishments covered by a giant sail-like structure.

James Kometani, Hawai'i Community Development Authority chairman, said competing proposals were exceptionally strong but A&B's plan narrowly edged them out.

"HCDA is very excited about A&B's proposal, and its cultural appropriateness to the Kaka'ako waterfront," he said. "We believe that (A&B's) Hawai'i roots and their business successes will ensure that the Kaka'ako waterfront will not only serve as a gathering place for Hawai'i's people, but will also serve to create new opportunities and strengthen Hawai'i's economy."

Runners-up, in the order favored by the agency, were a partnership involving Texas-based Hunt Building Corp. called Kewalo Nui Partners, local firm Stanford Carr Development and the Chicago-based owner of Ala Moana and Victoria Ward shopping centers.

The competing plans ranged in estimated development costs from about $680 million to $870 million, and included elements such as a hotel, aquarium, museums, a bridge, Hawaiian music hall of fame and amphitheater. All competing plans included retail, restaurants and 700 to 1,300 residential condos.

A&B's project scored 94 points to Kewalo Nui's 92, followed by Carr at 89 and Victoria Ward at 69.

The four plans were finalists among as many as 15 respondents to a request for proposals issued by the state in January.

The agency made yesterday's selection based on how well proposals met criteria including consistency with the state's vision, revenue produced for the state, economic viability and developer experience.

Now the agency will negotiate detailed development terms with A&B, such as how much the state receives in commercial lease rent and condo sale proceeds. If no agreement can be reached, the state could negotiate with runners-up in the order ranked.

A&B proposes paying the state $50 million for the land under the condos plus half of unit sale proceeds above a certain level. A&B also offered to pay $600,000 a year in lease rent for the commercial space.

The public also will have an opportunity to help refine details of A&B's plan at subsequent public meetings, according to the state and A&B.

"This is going to be for the community," said Allen Doane, president and chief executive officer of A&B's Honolulu-based parent company Alexander & Baldwin Inc., which owns Matson Navigation Co. and is involved with real-estate development projects including the Kaka'ako condo Hokua, Kaua'i community Kukui'ula, resort development at Wailea on Maui and the Kunia Shopping Center.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.