A dispute between the state and Hawaii Pacific University remains unresolved over several million dollars in repairs to piers around Aloha Tower Marketplace, which HPU owns and where it houses and teaches some of its students.

The state Department of Transportation chairs the Aloha Tower Development Corp. and originally told HPU — Hawaii’s largest private university — in 2021 that it owed the state $1.75 million by Dec. 31, 2021.

DOT gave HPU multiple extensions into 2022 as tensions escalated through a series of back-and-forth letters.

The amount owed by the university then escalated to the total $3.5 million DOT made in pier repairs before HPU bought the waterfront complex, along with demands that HPU renovate all of the parking lots, piers and roads surrounding the marketplace, according to a DOT letter dated April 6, 2022.

If HPU did not pay the state, then DOT said it will assume the university is not interested in renewing its lease and “will commence taking necessary steps to find a successor to the Aloha Tower Marketplace.”

In response, HPU wrote that the state “made clear its intentions to hold any lease negotiations hostage in exchange for a sum of money that is not owed.”

DOT did not respond to a request for comment Friday. But HPU said in a statement to the Honolulu Star-Advertiser that, “There are inaccuracies in the facts as stated. HPU is current on all lease obligations. HPU is in regular communications with the Department of Transportation — Harbors (DOT-H) and the Aloha Tower Development Corporation (ATDC) and has contacted the new administration to determine if there are any issues requiring resolution.”

The university’s business arm — Hawai‘i Lifestyle Retail Properties LLC — bought the marketplace in April 2011 from Ahi Aloha Associates and leased the land through 2058, revitalizing a retail- restaurant complex that at the time had a vacancy rate of approximately 70%.

HPU owns the 165,000-square-foot marketplace, located on the edge of Hono­lulu Harbor, but the state owns the 17 acres of land below and around it between Piers 5 and 14.

The agreement calls for the land to revert to the state once the lease expires if a new lease cannot be negotiated.

At the core of the dispute remains the issue of whether HPU assumed responsibility for the pier repairs that were undertaken before it took over in 2011.

Hawai‘i Lifestyle Retail Properties bought the marketplace in a sale that included an obligation to pay DOT $3.5 million, according to a 2022 annual report to the Legislature on the activities of the Aloha Tower Development Corp., which has responsibility for redeveloping, renovating and improving “the Aloha Tower Complex and Project Area,” as it’s called.

The Aloha Tower Development Corp. wrote in its report that a 2014 memorandum of understanding required HPU to pay $1.75 million — or half the cost of the pier repairs — that were done when Ahi Aloha Associates owned the complex, due Dec. 31, 2021.

HPU’s payment of the $1.75 million “would have obligated” the Aloha Tower Development Corp. to renew the present lease to the university, according to the report.

But in an April 12, 2022, letter to DOT, HPU wrote, “We have responded in detail to correct the inaccuracies in your contention that this is an on- going obligation of HLRP (Hawai‘i Lifestyle Retail Properties).

“The payment obligation became effective only in the event that the parties executed the Renewed Leases,” HPU wrote. “Because the Renewed Leases were not executed, no payment obligation was triggered.”

HPU also wrote that it had begun repaving and repair work that DOT previously said it “respectfully demanded.”

In a subsequent letter, DOT told HPU that “since no payments have been received, then the full $3.5 million remains due and owing. We will continue to periodically remind you of this obligation as we approach Sept. 28, 2058 to make sure we all understand this debt is not going to be forgotten or forgiven. Please plan accordingly. … (We) are pleased to see that HPU/HLRP intends to honor its repaving obligations.”

HPU student housing takes up the upper levels of the marketplace. The lower levels are used for student housing, a mix of classrooms, HPU activity centers, restaurants and retail merchants.

State officials comprise the Aloha Tower Development Corp., which is chaired by the deputy director of DOT’s Harbors Division; the director of the state Department of Business, Economic Development and Tourism, or designee; the chair of the Board of Land and Natural Resources, or designee; one member appointed by the state Senate president; and one appointed by the speaker of the state House.