Two years ago Castle & Cooke Homes Hawai’i, developer of Mililani, proclaimed the end to residential development within the master-planned community.

But the area could see more housing under a plan that is raising objections from many residents.

Castle & Cooke has contracted to sell a vacant Mililani Mauka parcel zoned for commercial use to local developer Gary Furuta, who proposes building a 226-unit affordable-housing complex on the site with state assistance.

Doing business as GSF LLC, Furuta obtained approval last week from the Hawaii Housing Finance and Development Corp., a state agency, for a $9.7 million loan to buy the 7.5-acre site and pay for design work.

Under state regulations promoting affordable housing, Furuta would be exempt from the zoning limitation.

Furuta plans to partner with a nonprofit to develop rental units in up to three-story buildings for residents earning no more than 60 percent of Oahu’s median income, with some units possibly reserved for seniors.

But the plan has drawn concerns from area residents and supporters of a performing arts center long envisioned for the site.

Opponents of the low-income housing plan believe more homes will add to already overcrowded area schools and make traffic congestion worse leading onto the H-2 freeway. They also believe Castle & Cooke reneged on a pledge to donate three acres of the site to the nonprofit arts center.

"It’s just very heartbreaking to see a big corporate company be disingenuous to the community it built," said Melissa Vomvoris, a former Mililani Mauka/Launani Valley Neighborhood Board chairwoman who helped spearhead the performing arts center effort.

Castle & Cooke officials said the nonprofit Oahu Arts Center failed to meet a deadline to demonstrate it had the financial ability to construct and operate the center.

"We supported their efforts and we still support their efforts," said Bruce Barrett, executive vice president of residential operations for Castle & Cooke.

The effort to establish the arts center dates back to the late 1990s and was led by Vomvoris and other community members who lamented that talented students from Wahiawa to the North Shore were staging performances in the Mililani High School cafeteria, which is poorly suited for such shows.

The Oahu Arts Center was designed featuring a 750-seat theater, as well as classrooms and studios for art, music and dance instruction for the public.

Project directors tentatively secured $2.2 million for planning and design work from the city under then-Mayor Jeremy Harris’ community visioning team initiative. And Castle & Cooke agreed to donate three acres to the city. But the City Council transferred the money to other uses in 2002 after questioning the worth of the arts center plan. The Council also cited competing needs such as completing Central Oahu Regional Park.

Arts center organizers later managed to obtain $100,000 from the city and $300,000 from the Legislature that helped produce design and feasibility plans for the $24 million facility.

Castle & Cooke agreed to donate the land to the nonprofit but had set a mid-2007 deadline for project organizers to demonstrate a financial ability to construct and operate the center. The deadline was later extended to the end of 2008.

Edmund Aczon, Oahu Arts Center president, said the nonprofit clearly met the deadline and would have been able to raise the money from donors if Castle & Cooke had executed an agreement to give the nonprofit the land.

Barrett said Castle & Cooke decided to seek alternative uses for the site and an adjacent 4.5 acres, which is next to a self-storage facility the company built a few years ago.

Barrett said no commercial users wanted the site, so the company accepted an offer from Furuta.

Vomvoris said Castle & Cooke promoted the arts center to prospective Mililani Mauka homebuyers and that the company is selling out homeowners and the arts center.

"The people have been lied to," she said.

Dean Hazama, a nearly 15-year Mililani Mauka resident and area neighborhood board chairman, said residents have been waiting for businesses on the site catering to the community.

"Tesoro and McDonald’s have been all the commercial business that we’ve had for a long time," he said.

The neighborhood board discussed the affordable-housing proposal July 6, and Hazama said nearly everyone who testified—perhaps 30 people or so—raised concerns or spoke against the plan.

Eight members of the board voted against the affordable-housing plan, and one abstained.

Furuta, who presented preliminary plans at the meeting, said he was surprised by the vote. "It almost seemed like their minds were made up already," he said.

Furuta, who has developed numerous affordable-housing projects—including Wilder Vista in Makiki, Hale Wai Vista in Waianae and Ainahau Vista in Waikiki—said he has won over early detractors on other projects and hopes he can do the same with the Mililani Mauka plan after he can add more detail.

If planning work, including an environmental assessment, proceeds smoothly, Furuta anticipates being able to break ground late next year and finish construction in 2012.