A key state official is warning the Turtle Bay Resort to drastically revise its plan to build up to five new hotels or it could face delays and other issues because of the strong chance that human remains will be found at the site.

A lawyer for the resort's owners, Kuilima Corp., responded that the project's financing could be jeopardized if the state doesn't back off.

An October letter to the developer from State Historic Preservation Division administrator Melanie Chinen states: "There is a high probability that one or more of the proposed hotels is located in an area within which numerous (as yet undiscovered) subsurface burials are located."

Chinen recommends that Kuilima do more testing in the area or "revisit and revise" its master plan to avoid the burial areas. She further suggests that the project be set back about another 500 to 650 feet from the shoreline than planned.

On Friday, Chinen told The Advertiser that while her letter does not have the authority of law, refusing to address the division's concerns now could lead to serious problems later for a project that only recently cleared a court challenge brought by environmentalists and Kuilima's neighbors, and then won subdivision approval from the city.

STIRRING CONTROVERSY

The project has generated controversy on the North Shore between those who feel that up to 2,500 more hotel rooms would transform the rural community and those who believe it would stimulate the economy and create needed jobs.

"The outcome for them is if they continue to proceed and they hit burials, then it comes back to this department for making a decision. ... It could be that we say relocate and we're quickly able to resolve that," Chinen said, adding that may also result in delays.

"Or it could be that we say preserve in place, and they're going to need to redesign. So there is that possibility that there will be delays down the line."

Kuilima officials have asked that Chinen's recommendation be withdrawn.

Terence O'Toole, an attorney for the developer, said "her suggestion is not only impractical, but would have very significant consequences."

O'Toole also said that Kuilima intends to follow the law when it comes to future burial finds as previously stipulated.

The case illustrates the ongoing conflict between land development and state laws designed to protect human burials and other culturally significant objects.

Officials with the historic preservation division point out that Kuilima has already identified 24 human burials at 19 locations, most of which have been moved to a burial reserve across Kamehameha Highway.

A key issue, Chinen said, is that the hotels are on what is known as jocular sands, sand dunes that have a higher potential to contain Hawaiian burials.

Chinen noted that the burials were found through the mid-1990s and that most of the archaeological mitigation work done for the project had been done in the 1980s. Standards have since become more stringent, she said, and her staff last year asked for a summary of the work and several mitigation plans that have been completed over the past two decades.

Kuilima agreed and Cultural Surveys Hawai'i submitted a new mitigation plan on the landowner's behalf. That plan, however, led Chinen to issue her October letter recommending that Kuilima's master plan be reworked with further setbacks.

Legally, Kuilima has complied with what's been asked by the division, which signed off on a 2003 mitigation plan, Chinen said.

"Does that preclude SHPD from coming back and saying, 'Hey, based on new information you have and new staff ... reviewing it, we have these concerns?'"

Chinen said she believes she is within her right to voice the new concerns and issue the warning that "if they do come across sites that are either archaeological or burials, they will need to (stop work), come back to this division and discuss mitigation options."

The position is a variation on a theme espoused by opponents of the project who have repeatedly questioned how a 20-year-old master plan that allows for the development can still be in effect.

Chinen also noted that work had to be halted repeatedly at a Wal-Mart construction site in downtown Honolulu because bones were often found. She said something like that could happen at Turtle Bay, which is why she suggested that Kuilima move its project away from the shore.

DEFENDING A PLAN

A commercial-residential project proposed last year for Ward Villages has also been delayed. The O'ahu Island Burial is involved, not the State Historic Preservation Division, because the finds occurred during survey work. The council and the developer are hashing out a relocation plan.

Kuilima has since pulled back the 2006 report and told SHPD that it is standing by its 2003 mitigation plan.

Kuilima attorney Peter Starn also wrote to Chinen asking her to withdraw her recommendation, noting that she had in 2005 approved a mitigation plan.

Kuilima relied on Chinen's 2005 approval to secure $400 million in development financing, Starn wrote.

The company is talking to "potential joint ventures and other strategic partners, as well as lenders," Starn said. The historic preservation division's new position "would severely and negatively impact these initiatives and would otherwise cause immediate and irreparable injury to Kuilima and ... would be likely to jeopardize the economic feasibility of the entire project."

The landowner is also in the final stage of refinancing its $400 million project loan. Failure by the division to withdraw from its current position "would likely impair Kuilima's ability to complete the refinancing of the project loan on a timely basis."

O'Toole, Starn's partner, said Kuilima has invested more than $100 million in renovating the existing hotel, putting up the Ocean Villas condominium project and preparing for the expansion. There was no justifiable reason for SHPD to change its position since no new information had surfaced since the agency's 2005 approval of its mitigation plan, he said.

As for the setback issue, O'Toole said, typical setback for oceanfront development is 40 to 60 feet. Kuilima is already required to maintain a 100-foot setback and is further limited in what it can do 100 to 300 feet back from the Kawela Bay section of the project, he said.

"It wouldn't be hard to envision that her suggestion ... would impact every single parcel along the shorefront," O'Toole said. "It would totally change the master plan to the point where you take 20 years worth and work and say (SHPD) wants us to ... revamp what we now have hundreds of millions of dollars invested in."

Kuilima does not intend to change its master plan and is under no obligation to do so, O'Toole said. "All of the contingencies related to inadvertent burials are ones we're just going to have to deal with going forward," he said. "Nobody knows what we're going to find and that is not a reason to change the master plan."

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com.