The Tower District — as it will be called, assuming it’s redeveloped as planned — surrounds Hono-lulu’s iconic Aloha Tower, right on the waterfront. Decades ago it was viewed as a diamond in the rough, but success has eluded those who have attempted to polish it up. Aloha Tower Marketplace, the retail complex there now, has struggled for years.

Now there’s an intriguing prospect of a complete overhaul, repurposing the center as a mix of retail with Hawaii Pacific University campus amenities, classrooms and dormitory space. The $32 million plan would yield dorms for 320 HPU students on the second floor of the existing retail center, as well as a sports and entertainment venue in the Pier 10 building and a faculty club and alumni center at the former site of the Hawaii Maritime Center.

Certainly the deal could result in more robust business activity with the university anchor than now exists, and a terrific upgrade for HPU. Dorm space is absolutely needed for students in high-rent Honolulu. Providing some right downtown, and in such an attractive waterfront location, would help immensely in the university’s marketing efforts and growth plans — a win-win for all concerned.

There are complications, which the two principal partners should work hard to overcome. They are HPU and Hawaii Lifestyle Retail Properties LLC, the corporate entity led by developer Ed Bushor that bought the marketplace for $14 million in December, with HPU as 80 percent owner.

The issue is financing: HPU plans to go to market with $120 million in tax-free special purpose revenue bonds that lawmakers approved last session. But to tap them, HPU, a private nonprofit university, can’t have a profit-making partner, and is negotiating to buy out Bushor’s 20 percent interest.

Fortunately, both sides see an opening for a final deal to be concluded.

There are issues that will need to be handled during the execution phase, as well. The design, tenant mix and security staffing would need to provide workable accommodations for the interface of academic and retail activities.

This has worked well in other, larger cities, but it’s a new experience for Honolulu. HPU already manages its administrative and classroom operations in its mauka downtown leased spaces, but having a school in the same venue as retailers that are active at night is a new challenge.

The financing is enabled under the Hawaii Constitution as a way to encourage a public good by allowing private entities to sell more attractive, tax-free bonds. The state’s sacrifice is the potential tax revenue, but it is not liable for the loan, state officials have said.

The larger vision is that HPU would spend its bond funding on several major projects, including $28 million on the expansion of its Hawaii Loa campus in Kaneohe, improvements to other facilities nearer its existing Fort Street Mall campus and work at its affiliated Oceanic Institute near Makapuu.

The Windward and downtown campuses are already shuttle-linked and the expansion effort should ratchet up the institution’s allure by several notches, raising its appeal as an urban university setting.

In conjunction with Hawaii’s other postsecondary institutions, a better-equipped downtown campus, along with a more vibrant business district, would be an advantage to the students as well as the larger community.