The first piece of a master plan envisioned to transform 60 acres of mostly retail and industrial space in Kakaako into a new neighborhood with 22 residential towers got the green light Wednesday from the state.

The Hawaii Community Development Authority, the state agency overseeing Kakaako development, voted 6-0 to approve construction of a 400-foot moderate-priced condominium tower at Ward Centers with 424 units.

"We are obviously very happy with the decision," said David Striph, senior vice president in Hawaii for Dallas-based Howard Hughes Corp., the project developer and owner of Ward Centers.

The vote followed impassioned testimony from several people who criticized Hughes Corp. for asking for exemptions to HCDA rules for some elements of the tower at 404 Ward Ave.

Hughes Corp. sought HCDA approval to build the tower 120 feet away from an adjacent affordable rental tower, Kauhale Kakaako, instead of the 300 feet required for spacing between broad sides of towers.

The developer also sought to build the tower’s garage 75 feet high, above the 45-foot limit in the master plan, though under rules revised last year the limit became 65 feet.

Paula Stuart, a Kauhale Kakaako resident, said the lot is too small for the tower.

"It’s like a 300-pound lady trying to wear a size 3 dress, or a 300-pound man trying to wear size 24-waist pants," she said.

Renee Ing said affordable housing is needed, but that Hughes Corp. appears to be packing it onto a corner of its land, in effect segregating moderate-income residents from other towers where units will sell for more than $1 million.

Hughes Corp. is required to produce 20 percent, or 860, of the 4,300 residential units allowed in its master plan for residents earning between 100 percent to 140 percent of the median income. The 404 Ward tower would satisfy close to half of the requirement, with 375 of 424 units tied to the income limit.

Kakaako resident and former Hawaii legislator Galen Fox characterized the project as having a ghettoizing effect. He asked HCDA board members if they have been to Kauhale Kakaako, or if they can imagine what it will be like for half the building’s residents to look out their windows into the side of a parking garage or other homes.

"Go by the rules," Fox said. "Don’t build this project."

Brian Shimokawa suggested that Hughes Corp., which has 60 acres to work with, should be able to make money developing within HCDA rules.

"I really hope you can find it in your heart to deny these (requested rule) modifications," he told HCDA’s board. "It’s totally absurd."

A few people testified in support of the project, including local architect Joe Farrell, whose office is at Ward Centers, and Cindy McMillan, an official with construction industry group Pacific Resource Partnership.

Written comments submitted to HCDA were split with support and opposition to the project at 6-7.

Hughes Corp. said it carefully laid out a master plan that will improve quality of life for people moving to the neighborhood it calls Ward Village.

The developer said it needs a break from the tower spacing rule because the lot size is only 250 feet wide. A 75-foot setback from Ward is required, leaving just 175 feet for development. Also, a corner of the site needs to accommodate the city’s planned rail line.

"It’s impossible to achieve the 300-foot setback," said HCDA executive director Anthony Ching.

Ching pointed out that agency rules say the setback limit needs to be met only "to the extent feasible."

The staff report recommended approving the project as proposed but with the condition that Hughes Corp. include a landscaped screen fronting the parking garage.

HCDA recommended that the parking garage height be allowed at 75 feet to better accommodate ground-floor retail. Ching said it was impractical to put part of the garage below ground because of subsurface conditions including groundwater.

Brian Lee, HCDA board chairman, said after the vote that it was a difficult decision.

"There aren’t any easy solutions," he said.

After the public hearing and the vote, Hughes Corp. presented details of its next two proposed towers — one makai of the theater complex and one on the site of Pier 1 Imports.

The developer is seeking to deviate from some rules for these projects, too.

A 177-unit luxury tower makai of the theaters is proposed to be built 30 feet from Kamakee Street, a view corridor requiring a 75-foot setback. The tower’s parking garage is proposed to be 65 feet high, with a small part up to 77 feet.

The biggest rule deviation sought for the other tower, which would have 318 units, is building its parking garage 75 feet high.

HCDA is scheduled to hold an additional public hearing and vote on those two projects Aug. 21.