Real estate developers warned the City Council yesterday that a bill calling for a moratorium on development along a proposed rail transit line could potentially shut down projects already in the works.

"The wording in the bill puts all development to a stop. It just stops everything. There's no exemption, there's no exclusions, there's nothing," said Dean Uchida, executive director of the Land Use Research Foundation of Hawaii, representing developers and large landowners.

"So it doesn't matter if it's a government project, a private project, a nonprofit, anything. And that's a big broad category to just basically say there's no development in this corridor."

Bill 86 would establish a Fixed Guideway Transit Alignment Interim Development Control Area within a quarter-mile of the rail line and a half-mile of a transit station.

The designation would prohibit issuance of building, grading and other development permits for projects on property in the area for 12 months after passage of the bill or when a transit-related zoning ordinance is enacted, whichever comes first. Possible penalties for disregarding the law would include fines and jail time.

The City Council's Transportation and Planning Committee is scheduled to hold the final committee meeting today on a measure that names a mass transit system for Honolulu and a route.

Rail transit is the choice so far, and the committee could pick a route today from five options, including a 28-mile line between west Kapolei and the University of Hawaii at Manoa, estimated at $4.6 billion, or a 20-mile route from east Kapolei to Ala Moana Center estimated to cost $3.6 billion. A final vote on the transit selection is expected Dec. 22.

The moratorium bill would move forward only if rail is chosen.

Developers testified that the bill could affect affordable housing projects and shopping centers in Kapolei, the new Judiciary complex in Kapolei and the University of Hawaii West Oahu campus.

"We agree with the principle of Bill 86, but are unclear on how this proposed measure might adversely affect the phase one construction of the new UH West Oahu campus," Chancellor Gene Awakuni said in written testimony.

Steven Kothenbeutel, project manager with Avalon Development, said that the developer was about to announce plans for an estimated 300,000-square-foot office and retail center in the heart of Kapolei, near Kapolei Regional Park, at the corner of Kamaaha and Manawai streets.

"The concept is that in the evening time, after one's done with work, you can still stay in the center, you can go to dinner -- kind of like a Restaurant Row concept," Kothenbeutel said after testifying.

He said the developer recently had acquired the property from Campbell Estate, but attracting tenants to the project could be difficult if the moratorium were put in place.

"It's going to have a negative impact, definitely. Right now we are isolating certain types of tenants to come into play," Kothenbeutel said. "It certainly throws a wrench into the entire process."

David Rae, vice president of public affairs with the James Campbell Co., said plans for a shopping center and possibly housing development in west Kapolei would also be halted.

"We understand and appreciate the Council's desire to assure development adjacent to transit stations comply with standards of transit-oriented development," Rae said. "However, Bill 86 as currently written would have the effect of halting all progress in Kapolei."

Mayor Mufi Hannemann's administration hasn't taken a position on the bill, but also expressed concern about it.

"The provisions of Bill 86 have potentially significant and widespread impact on large areas of land," said Henry Eng, director of the city Department of Planning and Permitting.

Uchida, the developers' representative, said the bill could open up the city to lawsuits filed by impacted developers. "My own personal feeling, I think it will be a large financial exposure to the city," he said.

"Millions? Billions?" asked Councilwoman Barbara Marshall.

"Keep going," Uchida replied.

The effect would also be felt around Kakaako and Ala Moana, according to officials with General Growth Properties, owners of Ala Moana Center and the Ward Entertainment Center, who also have redevelopment and expansion plans.

"All of our properties are affected by this bill," said Jan Yokota, the company's vice president of Hawaii development.

Councilman Todd Apo, who represents West Oahu, said he's nervous about any type of moratorium on development.

"This could affect not only the big developments we've heard about, but the individual landowner who's trying to build a house and it happens to be within a quarter mile or half mile of the station," Apo said.

Council members who signed on to the bill said the intent wasn't to stop projects mentioned yesterday but to assure that anything built around train stations would be compatible with a lifestyle oriented toward transit use.

"Should we decide to select rail as our mode of transportation, I myself wouldn't want to see something akin to an Oklahoma land rush, where speculators would come in and try to take advantage of the situation," said Councilman Nestor Garcia, whose district includes Makakilo and Waipahu.

The Council sent the bill to the Zoning Committee for further hearings.