The state Office of Hawaiian Affairs was denied in its bid to develop residential towers on a couple of large parcels in Kakaako Friday evening after House leaders in the Legislature dramatically altered a bill sought by OHA and then rejected that draft citing a lack of support from OHA.

The death of Senate Bill 3122 decided one of the most controversial bills at the Legislature this year, and came after three days of negotiations in a joint House-Senate conference committee that was capped by a long day of suspense.

OHA officials were clearly frustrated by how SB 3122 was treated, while opponents of allowing residential use on OHA land in Kakaako makai of Ala Moana Boulevard rejoiced in the bill’s fate.

“It’s unfortunate how things went down,” said Kawika Burgess, OHA’s chief operating officer. “I’m disappointed.”

OHA, a state agency established to benefit Native Hawaiians, had sought permission to develop residential towers on a portion of nine Kakaako-makai parcels that the state conveyed to the agency in 2012 to settle a long-disputed debt over ceded-land revenues owed by the state

OHA sought SB 3122 because residential development can produce more income for its programs and services benefiting Native Hawaiians. The agency insisted that development on its land would have been done in a way that balances commerce and culture without inhibiting public access to the shoreline.

SB 3122 opponents argued that OHA shouldn’t be seeking additional income because it accepted the Kakaako land as an asset valued at roughly $200 million and limited to commercial development.

Earlier Friday, OHA officials announced that they did not support a proposed amendment from House leaders that would have broaden an area in Kakaako makai of Ala Moana Boulevard for residential high-rise development.

The proposal made by Rep. Cindy Evans would permit 400-foot residential towers to rise on eight large parcels between Ala Moana Boulevard and Ilalo Street — four owned by Kamehameha Schools, two owned by OHA and two owned by the state.

A competing proposal offered by Senate leaders supportive of OHA would have allowed residential towers on just two parcels owned by OHA. Previously, SB 3122 aimed to allow residential development on three OHA parcels.

House Speaker Joe Souki issued a statement saying that committee conferees could not agree on a compromise. He cited OHA’s lack of support for the latest House proposal. “We look forward to working with OHA during the interim to find solutions to help maximize the value of OHA’s Kakaako properties,” he said.