Broken piers, empty slips, substandard facilities and dirty grounds — for many years that could describe the state’s Kewalo Basin boat harbor.

This appearance largely has improved over the last three years after a private firm was hired to manage the harbor. Rental rates and occupancy were boosted, and the state is awash in surplus income from the formerly neglected property in Kakaako.

Now an additional degree of privatization is being pursued to expand and dramatically upgrade the harbor.

The state agency that owns Kewalo Basin, the Hawaii Community Development Authority, is proposing to lease the 143-slip harbor for 50 years to California-based marina operator Almar Management Inc. and a partner.

If approved by HCDA’s board, Almar would finance $18 million in planned work to replace all piers and docks, increase berth spaces by 100 to 243 and add other new amenities including a fuel dock, maintenance dock and sewage pump-out system. The new, expanded facilities would be available to commercial and recreational boaters.

The lease arrangement would help complete harbor redevelopment in three years. Without the lease, harbor redevelopment would take longer and be less definite, given government funding uncertainties and procurement bureaucracy, according to HCDA Executive Director Anthony Ching.

Ching also said private development will save the state $18 million while still generating a positive return for taxpayers.

"This brings certainty and efficiency to develop the project, and we don’t lose (ownership of) the asset," he said. "We would become partners."

Some harbor tenants, however, are concerned about handing over the redevelopment plan, which HCDA crafted, to a private firm.

Gary Dill, owner of the commercial fishing boat Imua, questions the sense of privatizing an improvement plan forecast to generate profits. "If it’s feasible and profitable, why doesn’t the state do it?" he said. "It’s a proven moneymaker."

Dill also fears the improvements will attract more wealthy yacht owners to the harbor, which historically was reserved for commercial fishermen and tour activity charters, and make it easier for the state to raise rents.

Conflict over the future of Kewalo Basin has been churning for about six years since the state Department of Transportation, which managed the harbor since statehood, announced its intent in late 2005 to turn over operations to HCDA.

The Department of Transportation also owned the property until 1990 when ownership was transfered to HCDA.

Because DOT poorly maintained the harbor and refused to pay to renovate property, HCDA was left to make badly needed improvements.

In a 2007 plan, HCDA proposed spending $14 million to repair unusable slips and add new restaurants, a convenience store, fuel station and other improvements financed by a 100 percent increase in slip rents plus maintenance fees.

Harbor tenants opposed the plan, and after meetings, negotiations and a lawsuit, HCDA adopted a scaled-back rate hike and improvement plan.

The agency officially assumed control of the harbor in March 2009 while outsourcing management to Almar and allocating $4.9 million to replace one dock.

In the last three years, some repairs have been made, and occupancy has surged to 100 percent from 40 percent, largely due to HCDA opening the harbor to recreational boats. At present 46 percent of boats at Kewalo Basin are pleasure craft, though commercial boats get priority for vacant space.

HCDA has taken in $700,000 more than it spent on the harbor in each of the last three years on average, Ching said. However, no major pier replacement work has occurred. Ching said about $1 million of the $4.9 million allocation was spent on planning, design and permitting work, including an environmental impact statement.

Ching said the agency could try to proceed on its own with redevelopment, but he said that would involve taxpayer risk. The work also would be subject to state funding and would probably take four or five years to complete, if not longer, given procurement requirements.

On the other hand, HCDA could achieve potentially bigger financial returns if it executed the project well.

Under the private redevelopment scenario, HCDA would still benefit from a successful project by collecting a percentage of harbor revenue from Almar. HCDA is currently the chief beneficiary of harbor operations and pays Almar for its management services.

Regardless of whether HCDA leases the harbor to Almar, rental rates and harbor rules would remain under HCDA control.

If the private redevelopment plan is approved, Ching said the agency will use the $3.9 million balance allocated for the pier replacement to fund other agency projects.

"I think it’s a good thing," he said of the plan. "The authority doesn’t have $18 million to devote to this project."

HCDA’s board is scheduled to vote on the proposal Wednesday. If the plan is approved, Ching said construction could begin by the end of the year.