Herbert Horita has completed his repurchase of the undeveloped 2,000-home second phase of Royal Kunia out of bankruptcy and is partnering with another local homebuilder, Stanford Carr Development, to finish the master-planned community Horita started nearly 20 years ago.

Horita on Monday delivered on his $50.2 million bid made at an August auction for the Royal Kunia property that led his firm, Halekua Development Corp., Royal Kunia's original developer, to file for bankruptcy in 2003.

Two California firms, Canyon Capital Realty Advisors and California Mortgage and Realty, loaned Horita $97.9 million to pay off all Halekua creditors and provide nearly $20 million for pre-development expenses and infrastructure.

The Central O'ahu project's revival is expected to provide about 600 homes for low- and moderate-income residents, as well as a badly needed elementary school, a state agricultural park and county park. Initial homes are expected to be finished by late 2009.

Horita, in a statement, said: "I am very gratified to be given this new opportunity to resume what has been my life's work — the building of homes for Hawai'i's working-class families."

The developer has built more than 13,500 Hawai'i homes but saw his fortunes crumble during the Japanese investment downturn of the 1990s that led to his losing some of his highest-profile projects — Ko Olina Resort & Marina, Maui Lani and Royal Kunia.

Royal Kunia's first phase was largely built by a partnership led by Castle & Cooke after Horita encountered financing and permitting difficulties.

Horita's rebound essentially was made possible by the rapid rise in real estate and home values over the last few years.

The developer was a surprise bidder for the 161-acre second phase of Royal Kunia at last year's bankruptcy auction. Horita outbid Stanford Carr, who stopped $100,000 short of the $50.2 million winning bid.

At the auction, bankruptcy Judge Robert Faris expressed doubt that Horita would be able to complete construction of all 2,000 homes, but he approved the bid.

Yesterday, Canyon Capital and California Mortgage announced that Halekua arranged for Carr to serve as project manager for the pre-development and portions of the actual development of Royal Kunia Phase II. Horita will own the project through Halekua-Kunia LLC.

Horita was not available to comment on his partnering with Carr, a developer with projects on O'ahu, Maui and the Big Island. But it is fairly common for developers of massive projects to share development with rivals as a way to spread risk and complete subdivisions more quickly.

Royal Kunia Phase II was originally set for development in 1994, but the project stalled after Horita ran into financial trouble.

Some residents in the 'Ewa region are concerned that finishing Royal Kunia will add to traffic congestion plaguing their communities.

But some residents in Royal Kunia's first phase, which includes about 1,900 homes and a commercial center, have long desired completion of the second phase because it was supposed to include amenities for the first phase such as a pool and multipurpose facility.

The project also is required to donate land for and help finance an elementary school for the broader community, and make the section of Kunia Road between the new phase and Kunia Interchange into a four-lane highway with auxiliary turning lanes.

Royal Kunia is just one of several planned developments in the Central and Leeward O'ahu communities expected to see the construction of more than 40,000 new homes during the next two decades.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.