The University of Hawaii and Townsend Hawaii LLC, the original developer of the Cancer Research Center of Hawaii, have agreed to a tentative $2.5 million settlement of a breach of contract lawsuit Townsend filed after it parted ways with UH on the project last year.

The verbal agreement comes as UH prepares to break ground Oct. 28 on the long-awaited $120 million cancer research facility in Kakaako.

The center had been delayed for several years because of financing and changes in scope and vision among UH officials.

UH chose Townsend to negotiate a deal on designing, financing and building the center, but talks with Townsend broke off in June 2009. The university later selected Kobayashi Group LLC to oversee design and construction.

The suit sought damages, including lost profits.

The proposed settlement will be brought before the Board of Regents for approval on Oct. 28, the same day as the groundbreaking for the 150,000-square-foot center next to the John A. Burns School of Medicine. If approved, details of the settlement will be made public. The six-story center is scheduled to open in early 2013.

"We’re very happy there appears to be a resolution," said Paul Alston, Townsend’s attorney. "The litigation was very hard fought."

The agreement primarily covers costs Townsend incurred while planning the cancer center, first envisioned to be a 225,000-square-foot facility. Townsend had planned to build the building and lease it to UH.

The scaled-down project will be built next to the medical education building, where a parking lot sits.

Besides the change in size, the center has also scaled back plans that originally called for a patient clinic. Treatment services will be left to Hawaii hospitals.

"We would’ve ended up building a center that costs more in the end and duplicate services that already exist" if the clinic was included, said Tina Shelton, spokeswoman for the UH System. "It’s a way to move forward that will ultimately cost less for the taxpayers and build the kind of cancer center that we need."

The new project will make for a "better, more efficient cancer research center that’s cooperative in nature," she said. The goal is to develop high-caliber cancer treatment and research so that people no longer have to travel to the mainland to be treated for certain types of cancer, she said.

UH received $28 million from the state’s cigarette tax fund to help jump-start the project and ensure continuation of its National Cancer Institute designation.

The center is one of more than 60 designated National Cancer Institute facilities in the United States, and must meet strict standards — including evaluation at least every five years — to receive financial support.

As it exists today, its operations are scattered, with about 150 employees at a building on Lauhala Street near the Queen’s Medical Center, and another 80 split between the UH medical school and the former Gold Bond Building on Ala Moana Boulevard.