A block mauka of Kalakaua Avenue, the urban resort paradise outlined in the tourism brochures begins to disappear.

Views of Waikiki’s famous beaches and aquamarine waters, its fancy hotels and designer shops are replaced with at best a transitional neighborhood. In the backside of the Waikiki Special District, new development is surrounded by blight in part because of the restrictions from city regulations adopted in 1976 to set height, density and setback requirements. While the rules helped stop Waikiki from becoming an urban jungle, they had the unintended effect of rendering many owners unable to improve their nonconforming properties or sell them for a good price.

Owners of lots under 10,000 square feet were so hard hit by the criteria that only three small lots were developed or redeveloped in the Waikiki Apartment Precinct in the more than three decades since the special district was established. Without investment in the small lots, which make up the largest portion of Waikiki, eyesores have grown.

"The Waikiki Special District Land Use Ordinance was a misguided and flawed attempt at urban planning that went astray," said Cal Dickinson, who owns a 4,500-square-foot vacant lot, sandwiched on Kalaimoku Street between a luxury condo and boarded-up buildings, decrepit rental units, weed-infested lots and illegal parking lots.

Dickinson’s lot has been vacant since he bought it for $700,000 at the end of 2010. However, he and others are hopeful that the passage of city Bills 52 and 53 last month amending the 1976 ordinance will stimulate development in the deteriorating portions of the district.

The Waikiki Improvement Association, the Waikiki Neighborhood Board, the city Department of Planning and Permitting, the City Council, Honolulu’s architects and planners and Waikiki landowners, residents and businesses pushed for more than two years for the changes, which effectively rezone Waikiki, said Rick Egged, president of the association.

"In 1976 public policy was pressuring owners to combine smaller parcels to make bigger parcels. The idea was that it would result in larger developments and larger projects that fit into Waikiki as a large-scale resort destination," Egged said.

The idea behind the city’s 1976 land use ordinance was to guide Waikiki development, said Jiro Sumada, deputy director of the Department of Planning and Permitting.

"To the world, Waikiki is a recognized symbol of Hawaii and serves as a major component for the state’s tourist industry, providing vital employment opportunities as well as homes for thousands of residents," Sumada said. "The creation of the Waikiki Special District in 1976 was largely a response to the rapid development in the 1960s and 1970s and the changes produced by that development."

Successful redevelopment of major properties that took place under the ordinance include the Hilton Hawaiian Village, the Royal Hawaiian Shopping Center, 2100 Kalakaua and King Kalakaua Plaza, Sumada said. Also, some of the small lots in the Apartment Precinct have been successfully consolidated or jointly developed as condominiums and rental apartments, including Lanikea, Tusitala Vista, Lofts at Waikiki and Ala Wai Gardens, he said.

EGGED SAID THE RECENT effort to amend the ordinance was the first time that Waikiki’s commercial and residential forces have worked together to shape how their precincts will look in the future. There was less cooperation when the law was amended in 1996 and 2003, he said.

"We understand that you can’t have a successful commercial area and allow the residential area to deteriorate," Egged said.

The new amendments call for the merger of Waikiki’s resort commercial precinct into its resort mixed-use precinct, which will allow for new development and redevelopment of time-shares and hotels in its commercial core. They also expand Waikiki’s apartment mixed-use sub-precinct, reducing nonconformity of properties on Hobron Lane, Seaside Avenue and Kanekapolei Street and encouraging development of commercial businesses that serve the neighborhood.

"A lot of places that were made nonconforming in 1976 are conforming again, making it easier for them to redevelop," Egged said.

In addition to the zoning changes, the amendments provide greater flexibility for building height and ease setback, open space and parking requirements, said John Whalen, a planning consultant, who helped develop Bills 52 and 53.

"They emphasize the provision of usable open space, green roofs and other features that would provide greater public benefit," Whalen said. "We are trying to create a more pedestrian-friendly district."

Michelle Matson, who initially opposed the bills on behalf of the Waikiki Area Residents Association and the Diamond Head-Kapahulu-St. Louis Heights Neighborhood Board, said the groups were pleased when the new bills were amended to preserve the residential buffer along the Ala Wai Canal.

However, concerns remain regarding the loosening of height restrictions and the zoning change to commercial mixed use along Seaside and Kanekapolei. The changes created entitlements because they benefit the largest landowners like the Queen Emma Foundation, Matson said, and also set dangerous height and density precedents.

"We don’t see a lot of interests maintaining the integrity of Waikiki. We just see constant pressure to build to the maximum boundaries both vertical and lateral with no regard for carrying capacity," Matson said. "How are they going to protect our shoreline?"

Others in Waikiki view the amendments as a step in the right direction. The changes could improve Waikiki’s urban decay by making development and redevelopment of small lots, which make up the bulk of the neighborhood, economically feasible for the first time in more than 35 years, Dickinson said.

"When the global economy improves, the Apartment Precinct of Waikiki will enjoy a renaissance of small lot development and redevelopment with low- and mid-rise apartments and condominiums," Dickinson said. "Waikiki will once again become a very desirable neighborhood in which to rent or buy and to live and raise a family."

ERIC SACKS, AN INVESTOR who is rehabbing a once-derelict four-story walk-up on Lauula Street into 17 affordable one-bedroom apartment units, said if the new amendments make it easier for Waikiki owners to make improvements, it will benefit surrounding businesses and neighbors.

"When I got the building, there were squatters living in it," Sacks said. "Empty buildings are attractive nuisances. They attract homeless people, vandals and drug users."

Sacks said conditions at his building improved once work started.

"I’ve been told by businesses on Kalakaua that they are thankful that we bought the building," he said. "A police officer told me that it was really a bad place before, but that they haven’t had recent calls."

Dickinson is still unhappy with the condition of some of the properties near his lot. Regardless, he’s seen his own property value increase since the passage of the bills. He recently listed his lot for $1.28 million, and, if it doesn’t sell, he plans to build a five-story condominium.

"I can do that now," he said. "The new laws tripled my building space."

Mark Bratton, vice president of the investment properties division for Colliers International, said he doesn’t think that the amendments will generate a monumental shift in development. However, they are creating a buzz among investors, he said.

"I’ve been hearing most about the flexibility of uses," Bratton said. "I think it’s stimulating interest. I’m aware of one property that closed in December where the changes definitely made a difference in that sale."

Past regulations discouraged some clients, especially those who wanted to develop smaller lots, Bratton said. But the possibility of getting more building on the ground and collecting higher rents will attract investment, he said.

"I think we’ll see more investors in the next 24 to 36 months," Bratton said.

Vacant lots and teardowns will be in the first development wave, he said. Landowners who are getting steady rents likely will wait to make improvements, Bratton said.