The state Land Use Commission has revoked its approval for a long-planned $1 billion residential community on the Big Island after the developer couldn’t meet a deadline to build 385 affordable homes.

By a 5-3 vote Thursday evening in Waikoloa, the commission rescinded its prior decision to urbanize 1,060 acres near the West Hawaii resort area.

The move stands to block development of the 2,300-home project called the Villages of Aina Lea, and casts a cloud over what will become of roughly 60 affordable homes in various stages of completion.

Bob Wessels, managing partner for the project’s developer, DW Aina Lea Development LLC, said he was astounded by the vote, which he criticized as being insensitive to uncontrollable economic factors that delayed financing and construction.

Wessels also contends that the commission’s vote was invalid.

"The vote passed but it’s not enforceable," he said.

DW Aina Lea’s view is that six votes were needed to change the land from urban use back to agricultural use, in essence amending state land-use boundaries.

But the opinion of the commission and the state Office of Planning is that a boundary amendment isn’t being made. Rather, the original amendment from agriculture to urban use granted by the commission is being rescinded. Such a reversion, state officials say, doesn’t require six votes.

Hawaii County has been supportive of Aina Lea, but county officials were on furlough yesterday and couldn’t be reached for comment about the vote.

What happens next is unclear but likely will add to the tortured history of efforts stretching back more than two decades to develop the property.

The site’s initial approval for urban use was granted by the commission in 1989 to another developer, Signal Puako Corp.

Signal Puako planned to build 2,760 homes, and as part of its approval agreed to make 60 percent of the homes affordable to moderate-income buyers.

Another developer, Japanese firm Nansay Hawaii Inc., took over and amended the plan in 1991 to 1,550 homes and six golf courses.

Nansay, however, ran into financial trouble amid Hawaii’s flagging economy in the early 1990s, and managed to build only about 100 affordable homes.

In 1998 the land was sold at foreclosure; it was acquired a year later by an affiliate of Bridge Capital, a real estate and lending company based in the U.S. Virgin Islands.

In 2005, as Hawaii’s real estate market was booming, Bridge Capital proposed building 2,300 homes, two golf courses, a regional shopping center, a public school and 26 acres of park space.

But Bridge Capital said it couldn’t produce 1,300 affordable homes under the 60 percent requirement.

The firm petitioned the Land Use Commission to reduce the requirement to 20 percent, or 385 homes, arguing that the old requirement made any development cost-prohibitive.

The commission agreed but imposed a five-year deadline to deliver all the affordable homes after Bridge Capital said five years, including time for possible delays, would be reasonable.

Construction was anticipated to begin in early 2006, but Bridge Capital encountered permitting delays, including a new requirement in late 2007 to produce an environmental impact statement in the wake of a legal ruling over the Hawaii Superferry. The global financial crisis also hung up financing.

Given anemic progress on affordable-home construction, the commission voted to rescind its land-use approval in April 2009.

Bridge Capital asked the commission to reconsider and said it had sold a 61-acre portion of the property to DW Aina Lea to help advance construction. The commission put its cancellation on hold but imposed a March 31, 2010, deadline to complete 16 homes.

The 16 homes were built by the deadline but lacked roads or utilities.

Regardless of whether the deadline for "completing" 16 homes was met, it was clear DW Aina Lea couldn’t meet the bigger deadline to finish 385 homes by Nov. 17.

In September the developer petitioned the commission for an extension to allow delivery of 190 affordable homes by the end of this year and the other 195 by the end of 2012.

Wessels said $25 million has been spent on the project, including infrastructure work, 40 finished homes and 24 more in early stages of construction.

Occupancy, however, isn’t possible because the developer is hung up over permitting for a highway intersection, which has prevented construction of any roads or utilities to homes.

On Thursday the commission didn’t even take up DW Aina Lea’s motion for a deadline extension, instead voting to cancel its 1989 approval urbanizing the property.

Dan Davidson, the commission’s nonvoting executive director, declined to elaborate on the ruling or what will become of construction to date.

Wessels said he doesn’t see how the commission’s move will invalidate a subdivision that’s partially built, and he aims to push ahead.

"We haven’t stopped construction," he said. "We’re moving forward."