The Navy has agreed to convey to a developer 499 acres at Kalaeloa following the Navy's decision to not base an aircraft carrier in Hawai'i.

In return, developer Ford Island Properties LLC will relinquish a leasehold interest in 40 acres on Ford Island, where 433 civilian residential units were expected to be built and sold.

Navy concerns were raised about civilian home ownership on the island, which is an active military base.

As an alternative, the Navy and Ford Island Properties reached the new agreement that allows for an exchange of land suitable for development while contributing in-kind funds toward additional construction of Navy-related projects on Ford Island.

The Navy said the market value of Ford Island Properties' leasehold interest at Ford Island was appraised to be worth $61 million, and the value of 499 acres at Kalaeloa was appraised to be worth $75 million.

Ford Island Properties will contribute $16.6 million toward additional improvements on Ford Island.

The mostly vacant land at the former Barbers Point Naval Air Station had remained undeveloped while the Navy awaited a final decision for the homeporting of the aircraft carrier USS Carl Vinson.

A portion of the carrier's air wing was expected to be based at Kalaeloa, and the land was envisioned for military use. But the decision was made to base the carrier strike group in San Diego.

"Kalaeloa offers an opportunity to create needed jobs near the urban center of Kapolei," said Steve Colón, president of the Hawai'i Division of Hunt Development Group.

Ford Island Properties is a partnership of Hawaii Renaissance Builders, a Hunt entity, and Fluor Federal Services. The Navy said it has an existing contractual relationship with Ford Island Properties that allows conveyance of the land at fair-market value.

The developer said it will examine the short- and long-term needs of the area to come up with a use plan.

Ford Island Properties said it realizes there is a need to move forward as quickly as possible with the redevelopment of Kalaeloa to prevent further deterioration of the property.

"This arrangement is a positive step for both the Navy and Ford Island Properties, and will result in a win-win for the local community and all parties involved," said Rear Adm. Town-send Alexander, commander of Navy Region Hawai'i.

The Hawai'i Community Development Association's master plan calls for 6,350 new homes at the former Barbers Point. Gov. Linda Lingle and several state lawmakers last year wanted the state to buy the 499 acres at Kalaeloa.

In an $84 million development deal that began in 2003, the Navy leased or sold five underused properties in exchange for in-kind construction and infrastructure repairs on Ford Island.

The deal then with Ford Island Properties was unprecedented and was made possible through special legislation passed by Congress in 1999.

The Navy gave the developer 65-year leases at Iroquois Point and Pu'uloa, the 40-acre parcel on Ford Island and the 6.6-acre Halawa Landing.

The developers also were allowed to purchase 695 acres of housing at Kalaeloa after three years and were given rights to the 515-acre former Waikele Naval Magazine.

Ford Island Properties also will relinquish a leasehold interest in 4.9 acres at Iroquois Point in the new agreement.

Reach William Cole at wcole@honoluluadvertiser.com.