A developer is trying to proceed with a long-delayed condominium project in Hawai'i Kai, but an affordable housing contribution has yet to be negotiated with the city, and some cultural preservationists claim that ancient Hawaiian artifacts on the site are in danger of being destroyed.

An initial batch of 68 luxury units at Hale Alii at Hawaii Kai recently hit the market at prices from about $1.3 million to $3.7 million.

The sale offering through Prudential Locations represents part of a 133-unit first phase of the complex, which is approved for 297 units divided between two buildings adjacent to a private landscaped park with features including lagoon-style waterways, floating cabanas and a sand-edged pool with ozone-purified water.

Hale Ali'i Development LLC hopes to begin construction by March 2010 on the initial 11-story building.

However, the project still must clear several hurdles, including the affordable housing deal, attracting enough buyers and resolving what the city and state claim was illegal grading work that preservationists believe has harmed artifacts.

Hale Alii has been a challenging endeavor led by Mike Klein, a local developer primarily involved in affordable housing projects such as Nanaikeola Senior Apartments in Nanakuli completed earlier this year.

The site on Hawai'i Kai Drive near the Oahu Club became designated for affordable housing as a result of a 1986 arrangement to rezone a broader piece of Hawai'i Kai from preservation to residential use.

More than 1,200 homes built on nearby parcels triggered a requirement to build affordable housing equivalent to 10 percent of units developed, and that requirement was largely consolidated onto the Hale Alii parcel.

Klein's involvement with the site dates back about a decade from his interest to build much of the affordable homes on the site.

In 2003, Klein completed the 31-unit Kaluanui Senior Apartments there, and intended to expand that complex with another 35 units.

Other affordable housing projects planned on the site were 110 independent-living senior townhomes and 115 assisted-living units. A 5-acre park on an adjacent piece of land zoned for preservation use was also in the plan.

FINANCING WOES

However, financing these projects has been challenging. The developer of the assisted-living project, Zane Development, filed bankruptcy, and the Kaluanui senior rentals weren't expanded as planned.

Klein, through various companies, acquired more of the roughly 8-acre site including the 5-acre park site and pursued a strategy to build a mix of affordable housing and luxury condos that won support from the Hawai'i Kai Neighborhood Board.

The developer had an incentive to quickly deliver Hale Alii under a prior agreement with the city that allowed satisfaction of the affordable housing requirement with 100 units, including the 31 Klein already built, instead of 178 units if the 100 units were delivered by the end of 2005.

But Klein failed to meet the deadline.

Since then, the developer has worked to revive the project, but a new affordable housing agreement remains an issue.

City spokesman Bill Brennan said the Department of Planning and Permitting hasn't received a draft affordable housing agreement from the developer, and that no building permits will be issued until an agreement is reached.

Klein, through spokeswoman Ruth Ann Becker, said he expects the matter will be resolved in time to allow construction of Hale Alii's 133-unit first phase by March.

Klein wouldn't provide details on what he intends to propose in terms of the number of units and when they would be built because he said the city is finalizing new affordable housing guidelines that will influence what needs to be produced.

Becker said the affordable homes would be developed as part of the second building under a separate company led by Klein.

The initial building is being developed by Hale Ali'i Development LLC, which includes Klein and an affiliate of South Korea-based Hanwha Corp.

The adjacent building site approved for a stepped-down low-rise is owned by 21st Century Homes, which is headed by Klein.

The developer launched Hale Alii marketing and sales efforts about two months ago. Since then, he has characterized the interest as "quite high."

The Prudential Locations sales center secured four reservations at a grand opening event last week, bringing to 20 the number of reservations out of the 68 units available.

"We're comfortable with where we are in the process, and confident we'll be able to develop a plan that will meet or exceed the city's affordable housing requirements," Klein said. "In the meantime, we're also pleased at the response we've had from potential buyers who attended our sales center's grand opening."

The project, which Prudential calls inspired by the Kahala Hotel, is being marketed as a gated community with amenities including a wine tasting room, movie theater and resort-style spa. With units ranging from about 1,500 square feet to 4,400 square feet, Hale Alii also is being touted as a unique opportunity on the last large parcel of undeveloped land zoned for homes in Hawai'i Kai.

Another issue involves archaeological artifacts on the site that was once part of a pre-contact Hawaiian village.

Several months ago after obtaining state approval of an archaeological preservation plan, the developer began grading an area designated for a road along the park and water feature site.

The city said the work was done without necessary grading, grubbing and material stockpiling permits, and that violation notices were issued and haven't been resolved.

Klein through Becker said the work was supposed to be contained to an amount the city allows without a permit, but that the limits were accidentally exceeded.

During the grading work, a heavy-equipment operator broke through plastic construction fencing erected as a buffer zone around an old lava flow descending from Kaluanui Ridge, or Mariner's Ridge, containing three petroglyphs.

NO PLANS APPROVED

The state Historic Preservation Division of the Department of Land and Natural Resources had approved a plan by the developer to protect the petroglyphs, but said work around the preservation site wasn't allowed because a monitoring plan hadn't been submitted or approved.

The developer said operation of a backhoe inside the buffer zone was unintentional, and didn't disturb anything of archaeological significance identified in the preservation plan.

An equipment-scarred boulder and broken pieces of a large kiawe tree were left a few feet from one petroglyph of a man, which was undamaged.

Under the preservation plan, which was prepared by Archaeological Consultants of the Pacific Inc. for Hale Ali'i Development, three petroglyphs — pictures of a man, a piko and a fish — are to be protected.

But a group of preservationists believe the developer's consultant and the state didn't survey the property well enough, and that a more thorough study of the site should be required.

Ann Marie Kirk, a member of the community group Livable Hawaii Kai Hui, on a recent tour of the site found what looks like a fish petroglyph on a large rock not identified in the developer's report.

"We need to have the area cleared (of thick vegetation) so we can have a proper study of it," she said. "These are cultural sites. Once they're gone, they're gone."

Chris Cramer, another group member and area historian, said the recent grading cleared an area containing a large rock featuring what he believes is an anchor petroglyph documented in a 1985 survey of the area.

Cramer, who has visited the site, also said a petroglyph of a man with a spear exists outside the preservation area.

Kirk and Cramer said they aren't against the condo project being developed, but that heavily vegetated portions of the site slated for the park and water feature may contain previously undiscovered artifacts in danger of being lost if construction proceeds without additional study.

The two preservationists also said the Hale Alii site is part of a heiau complex that could be restored, though previous studies of the Hawea Heiau in Hawai'i Kai place remains of the heiau, or place of worship, nearby on land developed decades ago.

DLNR's historic preservation division reviewed Hale Ali'i's archaeological report, conducted a site visit and agreed with the report's conclusion that no additional study or protection is necessary.

Kaleo Pike, a former cultural specialist with the agency who visited the site with state archaeologists, said the surveys have been insufficient.

"We were not able to see a lot of things because it was so overgrown," she said.

The developer's report in part drew on previous archaeological studies from 1985 and 1993 that came to conflicting conclusions about artifacts on the site.

The 1985 report identified 14 petroglyphs. But the 1993 report identified no petroglyphs, saying some of the previously cited carvings were natural weathering lines while others were likely destroyed by prior landowners grading parts of the site.

The report prepared for Hale Alii also concluded that other recognized artifacts — a more than 100-year-old well lined with stacked rocks and remnants of rock walls and terraces — needn't be preserved because the structures have been altered in modern times or are heavily degraded. The state agreed with these findings, too.