Castle & Cooke Homes won state approval yesterday for the bulk of its proposed Koa Ridge community, concluding a more than decade-long effort for the contentious project between Mililani and Waipio.

The state Land Use Commission voted 7-1 to OK a first phase with 3,500 homes, a hotel, a medical campus, school, parks and commercial space. The commission reclassified 576 acres from agricultural to urban use to make the project possible.

A 192-acre second phase with 1,500 homes and a school will not be urbanized unless certain conditions related to access and infrastructure can be met, the commission ruled.

If county rezoning and various permits are obtained without undue delay, construction on the first phase known as Koa Ridge Makai could begin next year.

Completion of the first homes could happen in late 2012 or early 2013, the developer said.

The LUC’s approval was the biggest hurdle facing the estimated $2.2 billion project. The commission took in several hundred public comments on the project — some in support but most in opposition — in writing and in person during hearings that began in January and spanned several months.

Bruce Barrett, executive vice president of residential operations for Castle & Cooke Homes, said the company is satisfied with the commission’s decision.

"We’re delighted to bring this to a conclusion," he said.

The two biggest concerns expressed over the project were the loss of prime farmland and traffic impact.

Project supporters said Koa Ridge will bring jobs, a new medical facility operated by Wahiawa Hospital Association and affordable housing.

Beyond short-term construction jobs that are currently in short supply, Koa Ridge would generate 2,500 jobs within the community, or two jobs for every three homes, according to Castle & Cooke. The developer also expects that the city will require at least 30 percent of homes, or 1,500 homes, be affordable to low- and moderate-income households.

Castle & Cooke emphasized that the land for Koa Ridge is within the city’s urban growth boundary, which designates where farming should be protected and urban growth directed.

The project site is adjacent to the Waipio and Mililani communities as well as 3,700 acres owned by Kamehameha Schools approved for urban use.

The commission is scheduled to meet Oct. 15 to produce a written order of its decision which will contain certain conditions for developing Koa Ridge. Some conditions may pertain to mitigating impacts on traffic and farming.

The commission also will set out conditions for urbanizing the second phase, known as Castle & Cooke Waiawa. The conditioned approval of the second phase was made because much of the infrastructure providing access and utilities to the site relies on uncertain plans for adjacent land owned by Kamehameha Schools.

Regarding farming impacts, one condition urged by the state Office of Planning is that Castle & Cooke offset the loss of prime farmland by protecting an equal amount of prime Oahu farmland with an easement restricting the property to agricultural use forever. However, two commissioners said yesterday they don’t believe the LUC has the authority to impose such a condition.

About 546 acres of Koa Ridge’s 768 acres consist of the top two soil grades regarded as prime farming soil. That represents close to 5 percent of such high-quality farmland on Oahu suitable for crops.

The property was used for many years to grow pineapple. Currently, Aloun Farms leases about 325 acres to raise vegetables and seed corn.

Castle & Cooke has committed to lease Aloun 667 acres in Wahiawa for a 10-year term with a five-year extension option. That land is owned by Dole Food Co., which like Castle & Cooke is owned by billionaire David Murdock.

Castle & Cooke also intends to submit an application to the LUC later this year to designate more than 546 acres on Oahu for protection as "important agricultural land" under a state law passed two years ago.

Regarding traffic, Castle & Cooke has committed to spend $50 million on improvements, including new freeway interchange connections at Ka Uka Boulevard.

The developer also expects improvements planned by the state Department of Transportation will reduce Koa Ridge’s impact on traffic. The plans include an afternoon zipper lane, shoulder lane use and a direct connection linking H-2 to a planned park-and-ride rail station at Pearl Highlands.

A traffic analysis by Castle & Cooke said Koa Ridge would cause the morning commute to town to grow by about five minutes.

DOT expects Koa Ridge would worsen congestion at the H-1 and H-2 interchange that already is grossly over capacity at peak commute periods. But the agency said the benefits of Koa Ridge would outweigh adverse traffic impacts with certain improvements.

Most commissioners appeared satisfied that impacts can be sufficiently mitigated.

The exception was commission Chairman Vladimir P. Devens. He said although Koa Ridge was an excellent and innovative project, the concerns expressed over farmland and traffic convinced him to vote against approval.

"I think at the end of the day, there’s a price to pay," he said. "I can’t get over the hump on this."

The near-unanimous approval for Koa Ridge caps a more than decade-long effort to develop the area.

Castle & Cooke conceived of Koa Ridge in the mid-1990s as a community that would dovetail with the completion of Mililani, where Castle & Cooke finished building the last of 16,000 homes on 3,500 acres in 2008.

Early on, Koa Ridge was envisioned largely as a retirement community with a medical mall that included a hospital, assisted-living facilities, a medical technology park, biotechnology center, medical hotel and a sports medicine complex. At one time there even was an effort to have the University of Hawaii build a new medical school as part of the project.

In 2000, Castle & Cooke sought LUC approval for up to 7,500 homes on 1,248 acres in the area below Mililani on both sides of the H-2 freeway. The project was divided in three pieces: Koa Ridge Mauka, Koa Ridge Makai and Castle & Cooke Waiawa.

The LUC approved two pieces in 2002: Koa Ridge Makai and Castle & Cooke Waiawa, with a combined 3,200 homes on about 760 acres.

But the Sierra Club filed a lawsuit arguing that an environmental assessment should have been done prior to any land-use change. Castle & Cooke intended to complete the assessment after the LUC decision but before City Council consideration of a zoning change. A Circuit Court judge ruled in favor of the Sierra Club, and the decision was upheld by the Hawaii Supreme Court in a 2006 ruling that nullified the land-use change.

After modifying the plan to its present form, Castle & Cooke finalized an environmental impact statement and LUC application last year.