State Office of Hawaiian Affairs trustees voted Thursday to commission a master plan that will guide the agency in developing 31 acres in Kakaako makai of Ala Moana Boulevard.

Whether some of that land could be used to produce high-rise housing has yet to be determined by the Legislature, though OHA anticipates such a decision will coincide with requesting master plan proposals in May.

The House Finance Committee on Wednesday passed the latest version of a bill proposing residential use on OHA’s Kakaako land in a 12-2 vote. The measure, Senate Bill 3122, needs further amendment in a House-Senate conference committee to become useful because it wouldn’t take effect until July 1, 2050.

OHA hopes to develop residential buildings on a few of its nine parcels in the area, though that bid has become one of the more contentious issues at the Legislature this year.

That’s because lawmakers in 2006 banned residential use of land in Kakaako makai, overruling the state agency that governs development in the area, the Hawaii Community Development Authority. The HCDA, which owned the land at that time, had approved three towers on one parcel by Alexander & Baldwin Inc. after inviting bids for the project.

OHA was given that same parcel, which is shaped like a grand piano, along with eight others in 2012 in a settlement valued at $200 million to resolve disputed claims over unpaid ceded-lands revenue.

OHA contends that income from commercial development allowed under current zoning would fall short of what should be expected from land worth $200 million.

Numerous OHA supporters, including the agency’s strong base of Native Hawaiian beneficiaries, have lobbied for the bill that would allow residential development on three inland parcels and double the height limit on two of the parcels fronting Ala Moana to 400 feet from 200.

"The state has an obligation to Native Hawaiians, and allowing OHA to generate more money to serve our people will further that obligation,"Kalanikumalokulokuokealiimaikai Akana said in written testimony.

Many bill supporters say increased income from residential development will bolster OHA programs including grants that help Hawaiians in areas of health, culture, education and self-governance.

"Unlike most developers whose profits are for their personal benefit, OHA’s public benefit nature ensures that income is to be used for the well-being of the Native Hawaiian community," said Bruce Keaulani, kahu and CEO of Honolulu nonprofit Living Life Source Foundation.

However, a large number of people argue that OHA assessed the land’s economic value before it agreed to the settlement and that it shouldn’t be seeking to increase that value by undoing a law intended to benefit the public.

"OHA accepted the parcels as settlement knowing of the prohibitions against residential development and should not now use the ‘highest and best use’ argument to violate the trust of the community and the spirit and intent of the prohibition," Sharon Moriwaki, president of the community group Kakaako United, said in written testimony. "This would be another broken trust affecting all of Hawaii’s people, including Kanaka Maoli."

Hawaii’s Thousand Friends called SB 3122 a "bait and switch" measure. "It is not the Legislature’s responsibility to change laws for OHA’s economic gain," the organization said in written testimony.

One testifier suggested that OHA should seek some other additional compensation.

Overall, written testimony submitted to the House Finance Committee for and against the bill ran about 2-to-1, with roughly 100 individuals and organizations urging the committee to pass the bill, and about 50 urging a denial.

Besides the notion of whether the settlement was fair, another big disagreement involves how residential development on three parcels, which are occupied by buildings or paved lots, will affect the area.

OHA said it isn’t going to produce a luxury condo community and that it will balance commerce and culture in a way that makes Native Hawaiians and the general public proud.

"We seek to find the highest point at which the culturally rich use of our Kakaako Makai lands intersects with revenue-generating use of the parcels," the agency said in written testimony. "We understand better than any other developer the impacts of irresponsible development. Native Hawaiians have been victims of, and suffered most from, the consequences of reckless development."

Some of the people who lobbied against A&B’s plan and now oppose the OHA bill argue that public access to the waterfront will be impeded by residential development.

"Kakaako Makai offers open access to shoreline fishing, diving and popular body boarding and surf sites, as well as a waterfront promenade and significant panoramic views," Stuart Coleman of the Surfrider Foundation said in written testimony. "If these condo towers are allowed, they will establish a bad precedent, limit access and create a high-rise wall blocking the view plane."

Last month more than 130 demonstrators wearing "Save Our Kaka’ako" shirts lined Ala Moana Boulevard in Kakaako makai to rally against the OHA bill with a sign-waving campaign that communicated a similar message.

Kewalos surfer and bodyboarder Dean Nikaido, however, disagrees that building residential towers on certain inland lots will inhibit public waterfront access. "I do not understand people’s opposition that says OHA will block the shoreline and access for surfers,"he said in written testimony. "From what I have seen, it is OHA that has fought for fair access to public trust resources like water, beaches and shorelines, and fought to conserve our lands to practice traditional and customary rights."

OHA emphasized that residential use isn’t being sought for any waterfront parcels. "We are not seeking to do anything along the Kewalo waterfront that is not currently allowed," the agency said.

The bill would impose fees on residential units to be spent on helping maintain the area’s parks, ocean access, security and free public parking for park users.

Another issue is whether the bill is unconstitutional because it benefits a single entity. The state attorney general raised the concern and said in testimony that "this bill could be challenged as special legislation."

OHA argues that it is exempt from the prohibition on special legislation because it is a state entity and hasn’t decided how exactly to use any land granted residential use if SB 3122 becomes law.

The agency projects that it could award a master plan contract in August. The work would include a feasibility study on specific uses, a market analysis, an environmental impact statement and community outreach. A plan might be done next year to allow for permitting work to begin in 2016.