The city relinquished ownership of Kawainui Marsh land yesterday, opening the way for a $4 million project to develop the wetland habitat for four species of native and endangered birds.

The transfer of 693 acres to the state puts the entire 1,000-acre marsh under the administration of the state Department of Land and Natural Resources.

The state assumes responsibility for maintenance of the levee that protects the Kailua Coconut Grove neighborhood from flooding. The state and city agreed to the property transfer last year after years of wrangling about responsibility for flood control.

A $4 million appropriation for habitat restoration, which was secured by U.S. Sen. Daniel Inouye, “;was in jeopardy had we not successfully concluded today's transfer,”; said Mayor Mufi Hannemann in a news release.

The joint project of the state and the U.S. Corps of Engineers will involve clearing out silt and vegetation that chokes the waterways. “;We will dig out ponds to retain water for wetland birds,”; said Paul Conry, administrator of the DLNR Forestry and Wildlife Division.

“;Kawainui is the largest remaining marsh habitat in the state,”; said Conry. “;It is significant that we can move forward with restoring it.”; The marsh is home to Hawaiian stilt, Hawaiian moorhen, Hawaiian coot and Hawaiian duck populations.

“;This was an important step today. The state is very pleased to ... get all issues resolved about the land transfer,”; Conry said.

He said the state Legislature provided $400,000 last year for management of the natural resources of the marsh and maintenance of the levee.

Kawainui was recognized as a “;wetland of international importance”; by the Ramsur Convention, a designation that makes it eligible for grant money from conservation and environmental sources, according to the city.