Historic Waikiki Beach could see its first new shoreline tower in decades under an overhaul of Kyo-Ya Hotels & Resort’s Moana Surfrider and Princess Kaiulani properties approved unanimously by the City Council yesterday.

The $700 million redevelopment project calls for:

» A new 26-story tower where the eight-story Diamond Head Tower of the Moana Surfrider now stands.

» A new 33-story Pikake Tower on the site of the Princess Kaiulani property and renovation of the existing 29-story Ainahau Tower. Torn down would be two, 11-story towers — the Princess and the Kaiulani.

Both of the new towers would include residential and possibly time-share units, which had initially raised concerns from UNITE HERE Local 5. The union, which represents about 900 workers at the Moana Surfrider and Princess Kaiulani properties, had sued Kyo-Ya, contending that the environmental impact statement prepared for the redevelopment did not adequately address the issue of how jobs would be affected by the project.

But yesterday, Local 5 leader Eric Gill said the union had received enough assurances from the company that jobs would not be lost. As a result, Local 5 was prepared to drop its lawsuit, he said.

Kyo-Ya officials said they expect the number of jobs to increase despite the addition of residences and time-sharing units.

Meanwhile, the Council heard from about 10 Oahu residents who questioned the wisdom of granting height and setback variances to Kyo-Ya. The variances would not only add to the density and create more visual blight in Waikiki, but also set a precedent for other hoteliers with beachfront properties to follow, the critics said.

For instance, the maximum height of the Diamond Head Tower would be 308 feet. The current allowable height is 260 feet. The existing eight-story wing is 95 feet.

"Ordinances and planning guidelines were put in place years ago to ensure sensitive development of the Waikiki shoreline and to protect view planes, as well as ensure the future viability of our tourist industry," said Kailua resident Ursula Retherford, who opposed the project.

The project’s EIS said the variances would not set a precedent for other Waikiki shoreline properties because of the Moana Surfrider’s unique geographical characteristics.

Detractors of the project criticized city Planning Director David Tanoue for asking Kyo-Ya for community benefit contributions such as $125,000 for the upcoming Asia Pacific Economic Cooperation conference and $50,000 to the city for Pro Bowl-related expenses.

Tanoue said the contributions were not gifts, but "part of the planned development resort permit (process), which allows deviation from the land use ordinance."

Besides cash contributions, the developer has also agreed to preserve the Moana Surfrider, which is on the state and national historic registers.

"And if you look at all of the benefits that were proposed, they’re all related to the Waikiki community," he said. "So it’s almost like a balancing of policy. If we want to preserve the Moana, we have to give them the height."

Ultimately, it’s up to Council members to decide to approve the permits for the project along with the benefits package, he said.

Visitor industry and construction and trade union leaders testified in support of the project, calling it critical both for jobs and for revitalizing Waikiki.