It’s back to the drawing board for the sale of the Galbraith Trust lands.

On Tuesday, the Bank of Hawaii Corp. called off a deal by Canadian developers Dennis Blain and Phil Archer to buy the 2,100 acre Central Oahu parcel for $40 million. (See)

The bank now has to relist the property and may have to hire a new broker, which could take months and could add hundreds of thousands of dollars in costs.

The bank may end up having to settle for less than $40 million due to the softening economy.

But the delay also provides more time for state and city lawmakers and local community leaders to buy and preserve the agricultural lands.

The new sales effort could get a boost from a measure passed by the Legislature this year that allows owners of ag lands to convert 15 percent of their acreage into new housing development.

The bill, which is awaiting Gov. Linda Lingle’s signature or veto, could result more than 300 acres for new housing, which vastly increases the value of the Galbraith Estate lands.

People familiar the Galbraith Estate said the previous deal collapsed on Tuesday after Blain and Archer asked for a 60-day extension to see if the ag bill gets signed and to review its potential impact.

They also say that Canadian group is trying to find a way to revive their bid.

Either way, it looks like any sale won’t be completed until the end of the year. This means further delay in the termination of the trust and further delay in the distribution of its assets to the 600-plus beneficiaries of the estate.

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