The new owner of the former Chris Hemmeter luxury resort Kauai Lagoons plans to begin construction of 82 affordable rental apartments next month near Kapa'a as a prelude to a $700 million expansion of the Lihu'e resort in mid-2006.

The development plan will satisfy some of Kaua'i's dire need for workforce housing, and resurrect a long-stalled expansion of the partly developed 800-acre resort.

Local developer and Kauai Lagoons principal Kevin Showe envisions building a community for resident and visitor living around and on the 38-acre man-made lagoon that is the property's unique centerpiece.

About 600 condominiums, single-family homes and time-share units are planned around the lagoon.

Planned development also includes 18 hotel rooms required under zoning rules, 106 affordable rentals mostly outside the resort in Waipouli near Kapa'a and possibly 80 single-family lots on 1/2-acre parcels around the two existing golf courses.

Other planned improvements include a new golf clubhouse, spa and fitness center, fine-dining restaurant, picnic areas and convenience store.

"There is nothing comparable to it in the state," Showe said. "We think there will be immediate demand."

Co-developing the property will be Marriott Vacation Club International, which will manage the new time-share units and any condos or single-family homes that buyers want to rent out as vacation units through Marriott, which also owns and operates the neighboring hotel and time-share property known as the Kauai Marriott Resort and Beach Club.

"We're excited about the development," said Ed Kinney, vice president of corporate affairs and brand awareness for Marriott Vacation Club. "I think that the total proposed plan is an excellent one."

Kinney said a mix of Marriott brands will be represented at Kauai Lagoons, though which brands hasn't yet been finalized.

The first phase of construction will be the 82 Waipouli affordable rentals that in part satisfy a county requirement to provide affordable housing. Another 24 affordable rentals will be at the resort.

In mid-2006, construction is scheduled to start on the spa, restaurant and about 150 of the condo and time-share units.

Showe said unit sales probably won't start until May or June. Prices, he said, are too early to estimate, though he projected that the entire project, including time-share units where 52 shares are sold per unit, could generate $1.4 billion in sales.

It may take eight to 10 years to finish sales and construction of the resort expansion, different versions of which had long been planned by previous owners.

Hemmeter opened Kauai Lagoons in 1987 with an ornate 840-room Westin Kauai hotel, a Jack Nicklaus-designed golf course and wildlife-populated islets surrounded by the lagoon plied by gondolas.

A second Nicklaus golf course and two high-end shopping centers also were developed, but Hemmeter ran into financing problems that halted plans to build a second hotel, condos, time-share units and a third golf course.

Japanese firm Shinwa Golf Group acquired the golf courses, retail centers and expansion sites for about $200 million in 1991, but its effort to continue Hemmeter's grand vision was ruined the next year by Hurricane Iniki, whose damage forced the hotel and retail centers to close and hurt golf operations.

The hotel reopened in 1995 after it was bought by Marriott International and converted to hotel and time-share use, but Shinwa gave up on its development plan and was forced to sell its Hawai'i assets last year to help reduce roughly $600 million in debts.

Canada-based GolfBC acquired Shinwa's Kaua'i property in 2003, and partnered with Showe last year to develop the property, which already had most of the needed zoning for expansion.

Showe said he saw much of the property's potential in its underused lagoon. "We wanted to bring the lagoons alive," he said. "Where else could you have a beautiful and navigable waterway to drive around (in a boat) and visit restaurants and sightsee?"

Many of the planned condo and time-share units are to be built along the edges of the lagoon where residents could park boats. A few bungalows would be on four of the lagoon's small islands.

To make room for many of the single-family homes and time-share units, Showe plans to move the 14th and 15th holes of the Kiele Golf Course away from the lagoon and closer to the ocean.

The existing clubhouse would be replaced by a 130-unit condo/time-share, and former restaurant Inn on the Cliffs will become a 12-unit condo. Former retail center Fashion Landing will become the spa and fitness center.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.