Administrators of Hawaii’s public-sector employee retirement fund have come up with a plan to get out of a sand trap of sorts pertaining to an unusual asset it owns: two golf courses at Kaanapali Resort on Maui.

The state Employees’ Retirement System is proposing to add about 150 to 250 condominiums, a hotel and other amenities around 36 redesigned golf holes in what could be a $373 million plan that turns the property into a better investment for the fund.

The proposal follows two unsuccessful attempts by fund administrators to sell the Royal Kaanapali and Kaanapali Kai golf courses, which ERS acquired more than a decade ago from a company that couldn’t pay back a loan.

“We want to make a positive return,” said Vijoy Chattergy, ERS chief investment officer, adding that he also believes the redevelopment and revitalization of the golf courses will be positive for visitors along with Maui residents, who include many fund beneficiaries.

About 120,000 active, retired and inactive state and county employees are entitled to benefits through ERS. The golf property development plan is at a conceptual stage and is being led by an affiliate of Lowe Enterprises, a Los Angeles- based real estate investment, management and development firm retained by ERS.

Lowe has produced an environmental impact statement preparation notice that contains details of the plan and was published May 8 by the state Office of Environmental Quality Control.

The notice says a variety of amendments to zoning and community plan land-use designations will be needed from Maui County for the plan to proceed.

If those changes can be obtained within a reasonable timetable, Lowe projects that redevelopment work could start in 2020 and be finished in 2025.

Essentially, ERS seeks to shrink and reconfigure parts of the two golf courses covering 305 acres to free up 50 acres for commercial development that would include 156 to 256 condo units, a 136-room hotel, 80,000 square feet of retail space, a new golf clubhouse with a restaurant and pub, a special-events area, a family restaurant and an oceanfront beach club with a signature restaurant.

The two 18-hole golf courses would be reconfigured into one 27-hole championship golf course and a nine-hole par-3 course. A 4.5-acre park and numerous parking stalls also are part of the plan.

Ted Lennon, a senior vice president at Lowe, said the plan reflects an opportunity to reverse a trend of declining golf play and revitalize the property just mauka of several beachfront hotels and time-share complexes including the Sheraton Maui Resort &Spa, Kaanapali Beach Hotel, Westin Maui Resort &Spa and Royal Lahaina Resort.

“I think it’s a rare chance to do that,” he said.

Lennon said the two golf courses cover their operating costs but that there is a global trend of declining golf play being influenced by families spending more time together and new competing sports. At the two Kaanapali courses there have been efforts to counteract the trend with offerings such as “foot golf,” played with soccer balls, started about a year ago, and golf bag carriers that can be ridden like skateboards. Still, the gradual decline in business is not expected to reverse.

“It doesn’t seem to have a great future,” he said of the two courses as they are.

The two golf courses were built more than 40 years ago — Royal Kaanapali in 1962 and Kaanapali Kai in 1976. The pension fund acquired them in 2003 in a foreclosure case it filed against Amfac Hawaii, the original developer of Kaanapali Resort, which had borrowed $66 million from ERS in 1991 and used the two golf courses as collateral. The company defaulted on the loan on which it still owed $60 million, and no one was willing to bid more than that debt value at the foreclosure auction to acquire the courses.

In an effort to improve the properties, ERS invested $13 million in renovations between 2005 and 2007.

Under state rules governing ERS at the time, the pension fund was not supposed to hold assets acquired in foreclosure for more than five years. But efforts to sell the two courses for an acceptable price weren’t successful, and ERS obtained five-year waivers to the rule twice from past governors. Later the Legislature changed the rule so that ERS can hold foreclosed assets indefinitely.

Chattergy said golf courses are unusual assets for the pension fund, though real estate in general is not. The fund has about 5 percent of its assets in real estate, or about $789 million of the fund’s $15.4 billion value, and Chattergy said this asset class has produced a 14 percent return over the last five years.

If the development plan moves ahead, ERS would decide how to proceed as the property owner, and could form a joint venture with a private developer that might or might not involve the pension fund investing in development costs that Lowe roughly estimated at $373 million.