A stalled low-rise condominium project in Makiki started three years ago by a Chicago builder is being revived by local developer Peter Savio, who plans to resume sales and construction soon.

Savio recently took over as developer of the 46-unit Pensacola Chelsea from Falahud Din Shams, buying a loan Shams took out from Central Pacific Bank to build the $16 million project.

The loan, which was not in default, but was headed toward foreclosure, was bought at a discount, Savio said.

The Chelsea is the second real estate acquisition in two months for Savio, who bought the Pagoda Hotel, several blocks from the Chelsea, last month.

Savio, who heads Hawaiian Island Homes Ltd., is mostly known for buying apartment buildings and converting them to fee-simple condos.

Shams launched the Chelsea in early 2007 while the economy and local housing market were in good shape. But after receiving close to 200 reservations from prospective buyers and starting construction, a problem with a permit stalled construction, Savio said.

The problem was that the building, which was being built next to single-family and multifamily homes, encroached slightly into a setback area, Savio said.

Construction stopped for about a year while a variance was obtained. But by the time the problem was resolved, financial markets had tilted, and buyers withdrew. Shams, according to Savio, also had a Wahiawa project go into foreclosure that inhibited his ability to revive the Chelsea.

Shams could not be reached for comment yesterday.

"The market worked against a really good project," Savio said. "They had a good project."

Savio said he has not changed any features of the building, though Shams made a few changes in the last couple of years, including re-sizing units and removing two $575,000 penthouse units with 952 square feet of living space.

New prices for one-bedroom units with 570 to 661 square feet of living space range from $289,000 to $312,500.

That compares with prices that began at $335,000 when the original developer began marketing the project with mostly 630-square-foot units.

Savio said he was able to reduce prices because of the loan discount and cooperation from Shams.

Hawaiian Island Homes recently began marketing the Chelsea, and Savio plans to begin taking reservations on Saturday and completing construction by the end of next year.