A battle over a planned oceanfront hotel and condominium tower next to the Moana Surfrider Hotel in Waikiki is moving to a city review board.

Kyo-ya Hotels & Resorts received approval from the city Department of Planning and Permitting on Dec. 1 to position the tower within ground- and airspace-setback areas prohibited under zoning rules.

The zoning variance was the last major entitlement that the project needed.

But four environmental advocacy groups and an individual who objected to the variance at a September hearing appealed the decision on Monday to the city Zoning Board of Appeals, arguing that a bulky building in the shoreline setback is bad for users of a public beach.

The five-member board is expected to hold additional hearings on the issue and make a decision, though no schedule has been set.

Kyo-ya proposes replacing its existing eight-story Diamond Head Tower next to the historic Moana building with a 26-story tower tentatively planned with 185 hotel rooms and 40 condominium units.

The project is a piece of Kyo-ya’s $700 million Waikiki redevelopment project that also includes a new 33-story tower at the nearby Princess Kaiulani Hotel and renovating the existing 29-story Ainahau Tower there.

On the Moana site, Kyo-ya argued that existing zoning rules would prevent redevelopment of an old building that can’t compete with newer hotel offerings. Under zoning rules, hotels must be at least 100 feet from the shoreline. The Moana Surfrider Diamond Head Tower was built before that rule was adopted and is less than 100 feet from the shoreline.

Also, the makai face of the tower is supposed to back away from the ocean under the rules intended to prevent a flat curtain of towers hugging the beach.

Kyo-ya said the economic benefits of new hotel rooms would enhance Waikiki, and that it designed the new tower with a more narrow profile to increase mauka-to-makai views and provide greater access to the public beach compared with the existing hotel building.

The company also said that the seawall in front of the hotel will not be moved, though the edge of the new tower will be closer to the shore compared with the existing hotel.

"The hotel is not being built on the beach," said Greg Dickhens, Kyo-ya Co. LLC president.

Another position Kyo-ya has taken is that the state failed to widen the beach under a 1965 agreement that called for adding sand to widen the shoreline by 180 feet. Had that been done, the proposed tower would comply with setbacks, Kyo-ya said.

The environmental groups — Hawaii’s Thousand Friends, Surfrider Foundation, KAHEA-The Hawaiian-Environmental Alliance and Ka Iwi/Sandy Beach Coalition — along with preservation advocate Michelle Matson argue in their appeal that increased building density near the shore isn’t good for Waikiki or public beach users.

"Thirty-five years ago, the city was clear when it adopted the Waikiki Special District guidelines as law: No more towers on the beach," said Donna Wong, spokeswoman for Hawaii’s Thousand Friends.

The groups fear that a zoning variance for Kyo-ya will set a precedent for other Waikiki hotel owners to build in setback areas.

They argue that zoning variances aren’t the solution to a failed state agreement to widen the beach, and that property owners should renovate existing buildings that don’t comply with zoning rules or build something new that complies.

"This is not in the long-term best interests of our members and Hawaii’s signature destination," said Stuart Coleman, Hawaii coordinator for the Surfrider Foundation.

The appeal is the latest challenge to Kyo-ya’s plan, which was announced in 2006 and has overcome earlier objections from hotel employees and the environmental groups.

The City Council unanimously approved the plan in August. Along with the zoning variance, the Planning and Permitting Department approved a Waikiki Special District permit.

Kyo-ya projects that construction could begin in mid-2012 if final approvals can be obtained.