KAHULUI, Maui — The cost of an ambitious six-year, statewide Harbors Modernization Plan has been cut by $224 million, but officials say it still will go a long way toward relieving congestion at Hawai'i's busiest ports.

The downsizing of the original $842 million project is largely a result of recent economic developments, notably the departure of two of three Norwegian Cruise Lines passenger ships from the Hawai'i interisland market that opened berthing space at some harbors.

Most of the projects put on hold were proposed for Kahului Harbor, the third busiest port in the state behind Hono-lulu and Kalaeloa harbors on O'ahu. Construction at Nawiliwili Harbor on Kaua'i was eliminated, while plans for Kawaihae Harbor on the Big Island underwent a major overhaul.

In another change, tiny Hana Harbor in East Maui was added to the list of ports receiving infrastructure money under the revised $618 million modernization plan.

Gov. Linda Lingle yesterday signed into law Senate Bill 3227 that allows the state to move forward with the program, aimed at addressing the need for long-overdue improvements to meet increases in the maritime cargo and passenger service through 2030.

ISLE PORTS ARE BUSY

Ninety-eight percent of the goods imported into Hawai'i pass through the state's harbors, including consumer items, building materials, vehicles and fuel, according to the state Department of Transportation. The volume of maritime shipments is expected to climb by as much as 27 percent in 2010 and by as much as 93 percent in 2020, the agency said.

The new law, Act 200, authorizes DOT to issue revenue bonds to finance the harbor improvements, with the first increment of $124.4 million to be allocated in fiscal year 2009, which starts July 1. The bonds will be paid off with income from tariffs paid by harbor users.

Gary North, chairman of the Hawai'i Harbor Users Group, said shippers are ready to contribute what's needed to ease the congestion. He acknowledged that Hawai'i's port tariffs are below fees charged at other U.S. harbors and said the reduced price tag for the modernization plan is welcome.

"It's not going to be easy, but it's going to be easier to pay," he said.

The Harbor Users Group worked with the DOT and state legislators to identify and prioritize projects. Its members include Matson Navigation Co., Horizon Lines, Young Brothers, Norwegian Cruise Lines, Hawaii Superferry, Tesoro and Hawaii Stevedores.

Ultimately, consumers will bear the cost of increased harbor tariffs, but North said inefficient port operations that slow the flow of goods also increase prices by causing costly delays in distribution.

"If this (modernization plan) wasn't done, the multiplier effect of congestion over 20 to 30 years would have a significant impact on the cost of goods, more so than paying for this infrastructure," he said.

STATE'S 'LIFELINES'

Before signing the new law, Lingle described the state's harbors as "lifelines" whose importance is magnified in times of emergency and natural disasters. "If we don't have an increase in harbor capacity, the cost of living will rise even faster," she said.

Even as Lingle and other government and maritime leaders gathered at Kahului Harbor yesterday to celebrate the "landmark legislation," Harbormaster Stephen Pfister was anxiously waiting for berthing space to accommodate a coal ship that had arrived several hours ahead of schedule.

"There's only so many parking spaces and so many boats that want to come in," said Pfister, who spends a good chunk of his work day juggling vessel schedules at the congested Maui port.

He said the space crunch is even worse on land. "I don't have any room to set containers and these other things down or to park cars," Pfister said.

Kahului Harbor was to have received $345.1 million in improvements under the original plan, but that figure was cut to $98.3 million by dropping additional breakwaters and berths and terminals on the west side of the harbor for barges, cruise ships and the Superferry.

North said NCL ships crowded out fuel barges at Pier 1, so there was a need to create additional berthing space on the opposite side of the Maui harbor. He said the cruise line's "dramatic pullout" resolved the conflict for the short term, at least.

Michael Formby, head of the DOT Harbors Division, said the Harbor Users Group decided to shift its focus to the east side of the port, where current commercial activities are centered. Acquisition of additional land near existing operations is part of spending in the first year of the modernization plan, along with planning, design and environmental permitting for other projects.

The revised plan also calls for improvements to Pier 2B, fuel line repairs, relocation of cement silos and a study of breakwater construction at the Maui harbor, which is vulnerable to northeast swells. Formby said the state will look at joining with the federal government in constructing breakwaters sometime in the future.

WHAT'S PLANNED

Development of the west side of the harbor would have affected canoe paddlers, surfers, fishermen and other recreational harbor users. Although those plans are on hold, Formby said the option will remain in play under the 2030 Kahului Harbor Master Plan being developed simultaneously with the six-year modernization program.

Proposed improvements to Honolulu Harbor are valued at $259.5 million. These include a deep-draft wharf that could berth two container ships and a 70-acre container yard at Kapalama connected to Young Brothers' interisland barge yard.

At Kalaeloa, $57.85 million in projects is proposed.

Plans to build a new multi-use pier, known as Pier 4, at Kawaihae Harbor on the Big Island have been scrapped, Formby said. The Kona harbor will receive $97.75 million, with money that would have been used for the pier going instead toward improvements to the south gate, paving, lighting, fencing and highway work that will also benefit users of the small boat harbor at Kawaihae.

At Hilo Harbor, $61.4 million in planned upgrades include a new pier and interisland barge handling yard, and a third harbor entrance to help separate cruise passenger and cargo traffic.

A proposal to spend $10.3 million in construction at Nawiliwili Harbor on Kaua'i has been dropped. Instead, the state will spend $500,000 on a development plan, Formby said.

HANA ADDED TO LIST

Hana Harbor was added to the list of facilities to be upgraded, with $20 million in revenue bonds authorized.

Senate Transportation Chairman J. Kalani English, D-6th (E. Maui, Moloka'i, Lana'i), said the project will ensure the remote Hana community has a working pier that can support its needs, especially in times of crisis, such as the 2006 earthquake that damaged roads and left parts of the region cut off from help.

The DOT estimates assorted additional costs of about $23 million.

The first two years of the six-year plan will be devoted largely to planning, design work, environmental studies and some demolition and construction. Major construction will ramp up over the following two years, with projects completed by the fiscal year ending June 2014.

Act 200 also designates the Aloha Tower Development Corp. as the state entity responsible for management of the plan in partnership with DOT.