Condominium towers could sprout in Kakaako just makai of Ala Moana Boulevard if a bill sought by the state Office of Hawaiian Affairs is approved by the Legislature.

OHA is seeking the legislation to increase the value of 25 acres between Kewalo Basin and Honolulu Harbor that it received two years ago in a historic settlement with the state for deferred ceded land revenue valued at $200 million.

The measure, Senate Bill 3122, comes eight years after the Legislature prohibited residential development in the same area known as Kakaako Makai after public protests against a plan by local developer Alexander &Baldwin Inc. to build three condo towers on what is now one of the OHAparcels.

The bill is expected to rekindle the fierce debate over whether high-density housing is an appropriate use in the area.

"We’ve said it over and over and over again — commercial development doesn’t belong down there,"said Michael Kliks, a Manoa resident and founding member of the Hawaii State Bodysurfing Association who has a close connection to Kakaako’s waterfront that includes the Point Panic bodysurfing break. "It doesn’t make a difference who owns the land. It’s the same thing."

Kliks, along with others — including the community group Save Our Kakaako — fought to preserve undeveloped sites surrounding Kakaako Waterfront Park from housing and other commercial development by A&Bthat they feared would crowd out public use of the waterfront.

One difference now is that the land on which A&B intended to build was owned by the Hawaii Community Development Authority, a state agency, for the benefit of the general public. OHA’s mission is to use the land to benefit Native Hawaiians.

Under the bill, OHA is required to hold a public hearing on any residential project but still would need approval from HCDA, which regulates development in all of Kakaako.

Kawika Burgess, chief operating officer of OHA, said Wednesday that a recently completed analysis showed it would be "very difficult" to achieve the $200 million value of the land under existing zoning, but residential development would make it possible. "We are looking to achieve returns consistent with the $200 million valuation," Burgess said.

The bill is a broader version of one introduced in 2012, Senate Bill 682, that sought to allow residential development on two of OHA’s nine Kakaako Makai parcels. The two parcels that were identified front AlaMoana and not the water.

Six other OHA parcels have water frontages, mostly along the Ewa edge of the Kewalo Basin small boat harbor.

Sen. Clayton Hee, a former OHAtrustee and co-sponsor of the recent bill, said his view is that OHAshould have gotten more in its settlement with the state. His preference, though, is that only OHA’s land fronting Ala Moana should be approved for condo development.

"The highest revenue generation, as evidenced by what’s going on in Kakaako, is condominiums," said Hee (D, Heeia-Laie-Waialua). "It would provide a tremendous revenue-generating income for Hawaiians."

Senate Majority Leader Brickwood Galuteria (D, Kakaako-McCully-Waikiki) said he shares the view that OHA didn’t get enough in its settlement, accepting the land appraised at roughly $200 million.

"(The bill)is designed to give them what they need,"he said, adding that he doesn’t anticipate that residential use will be granted for all of OHA’s Kakaako land.

Other senators who introduced the bill at OHA’s request are Donovan Dela Cruz (D, Wahiawa-Whitmore-Mililani Mauka), Gilbert Kahele (D, Hilo), Michelle Kidani (D, Mililani-Waikele-Kunia) and Malama Solomon (D, Kaupulehu-Waimea-North Hilo).

Six other senators have signed on to the bill. Galuteria, Hee, Kahele, Kidani and Solomon are members of the Senate’s Hawaiian Caucus.

The 2012 bill was introduced by Dela Cruz and advanced out of several Senate and House committees but stalled without a hearing in the House Judiciary Committee.

SB682 drew support from the Native Hawaiian Chamber of Commerce and the Association of Hawaiian Civic Clubs.

Gov. Neil Abercrombie, who as a U.S. congressman in 2005 criticized the A&Bplan and HCDA, also lent his support to the new bill. "The Governor stands alongside OHA to find approaches and solutions that will help OHA help its beneficiaries,"his office said in written testimony on the bill.

Opposition to the 2012 bill was heavy from Save Our Kaka’ako members and others. In testimony submitted to the House Judiciary Committee in March 2012, 56 people submitted written testimony against the bill.

Ron Iwami, president of the group Friends of Kewalos, said allowing residential development in the area would set a "bad precedent for future exceptions to the law and will ultimately open the door for more residential high-rise development in (Kakaako Makai)."

Stuart Coleman with the Surfrider Foundation shared Iwami’s fear of a precedent.

"I was part of the Save Kakaako Alliance that helped stop luxury condos and residential units from being built on this last bit of public oceanfront land in Honolulu,"he said in written testimony. "The Legislature did the right thing in passing a law to ban residential development in this area, and it seems senseless to go against your own rules and make exemptions now."

The new bill has been referred to a joint Senate committee of Hawaiian Affairs/Economic Development, Government Operations and Housing followed by the Judiciary and Labor Committee. An initial hearing has yet to be scheduled.