The Legislature passed a bill directing state officials to pursue buying a scenic stretch of coastal land from Maui Land & Pineapple Co. to protect the area from possible development and shore up company pension obligations.

House Bill 1424 proposes buying 270 acres north of Hono lua Bay at Lipoa Point in West Maui. The bill instructs the state Department of Land and Natural Resources to engage in the effort.

The effort to preserve Lipoa Point has drawn overwhelming support largely from Maui residents and preservationists who testified on the bill. But some observers commenting on a March Star-Advertiser story about the bill characterized the deal as a bailout for Maui Land.

Whether the state buys the land could hinge on price negotiations. The land is zoned for agriculture, and its value is appraised at $2.6 million by Maui County for property tax purposes.

Maui Land suggested in written testimony on the bill that a purchase price should be based on the property’s highest and best use, which could be residential or some other commercial use.

Environmental groups and other proponents of the purchase have said Maui Land won’t sell the parcel for less than $20 million and that the price could be as high as $30 million.

Two early versions of HB1424 proposed issuing general obligation bonds for the purchase, but that language was later removed. Instead, lawmakers included $20 million of bond financing in the state budget to buy the Lipoa Point property as a capital improvement project.

Maui Land could use the money, given that the company has racked up major financial losses in recent years largely because of soured resort development in Kapa lua. To stay afloat, Maui Land has been selling land, including two golf courses. Such land sales helped the company generate a profit of $30 million over 2010 and 2011 after $200 million in losses in the two previous years. Maui Land fell back into the red last year with a $4.6 million loss, which was followed by a $1.8 million loss in the first three months of this year.

The company, which owns 23,000 acres of mostly agricultural land, has pledged substantially all of its real estate as collateral for debt obligations, including its pension fund.

HB 1424 states that Maui Land has committed to completely pledging any revenue from selling the Lipoa Point parcel against its pension fund, and that DLNR shall ensure "to the maximum extent practicable" that Maui Land uses sale proceeds to benefit its pension plan.

The bill also states that many Maui Land retirees would have to turn to state services and programs if the pension plan fails.

Maui County Council Chairwoman Gladys Baisa said in testimony on the bill that the pensions could be threatened if the Lipoa Point land is devalued.

It’s unclear what value Maui Land has placed on the parcel for debt obligation purposes, but the company claimed that a recent effort by Maui County to put Lipoa Point into a preservation district would devalue the property. As a result, all or nearly all of the land was left out of the county’s new preservation district boundaries.

That decision also has left a fear that Lipoa Point may be developed, a perceived threat that generated passionate support for a state purchase.

Lipoa Point is in state agriculture and conservation districts, but some preservationists fear that up to 20 homes could be developed on the site under lax state and county rules governing development on agriculture land.

Maui Land has attempted to develop the property in conjunction with preserving and improving much of the area for public recreation.

In 2007 the company floated a proposal to add recreational amenities at the bay such as parking, restrooms, picnic areas, a canoe hale and an educational facility dedicated to perpetuating Hawaiian language and traditions.

But to finance those improvements, Maui Land said it needed revenue and sought to earn it by developing 40 home sites mauka of Hono apii lani Highway and an 18-hole golf course makai of the road.

The plan was roundly opposed by community groups, and the company abandoned the idea.

Then in 2008 Maui Land sought county approvals for more urban and resort development in nearby Kapalua as a trade-off for protecting Lipoa Point and conveying the parcel to the county. This proposal gained support from county officials and preservation groups, but Maui Land imposed what the county viewed as a hasty deadline and the deal fell through.

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CORRECTION: The state Legislature included $20 million of bond financing in the state budget to buy the Lipoa Point property as a capital improvement project. An earlier version of this story and its headline reported that the Legislature did not appropriate any funding for the purpose of buying Lipoa Point.