Dream City. That’s what Alexander & Baldwin Inc. called Hawaii’s first modern, planned community, built on former cane fields in Kahului.

John Arisumi was a 27-year-old mechanic at A&B’s Hawaiian Commercial & Sugar Co. in 1951 when he moved his family from the plantation’s Spanish Camp into one of the 3,200 fee-simple homes that were sold to sugar workers and other blue-collar families for a starting price of $6,600.

"We were one of the lucky ones," said Arisumi, 89, who worked for HC&S for 25 years before becoming a business agent for the International Longshore and Warehouse Union.

New generations of working-class families are finding their own dreams of homeownership fulfilled as two major housing developments — Maui Lani and Kehalani — radically expand the boundaries of Central Maui by creating master-planned communities on a scale not seen before on the neighbor islands.

The vibrant green sugar fields that blanket much of the broad isthmus between Haleakala and the West Maui Mountains are giving way to a sprawling crazy quilt of residential and commercial projects. The border between the once-distinct towns of Kahului and Wailuku — home to more than a third of the island’s population — is being erased.

"There used to be a clean separation because Sandhills was the edge of Wailuku and there was a big gap of kiawe trees between Kahului and Wailuku," said Maui County Mayor Alan Arakawa. "But now most of those trees have been replaced with housing, and … very shortly the two cities will essentially merge."

Maui Lani, which extends from the southern edge of Dream City, is the larger of the two developments, with zoning for 3,000 homes on 1,012 acres. So far about 1,200 units have been built. Kehalani, on either side of Honoapiilani Highway in Wailuku, is to have 2,400 units on 550 acres, with 1,300 homes completed.

Future residential development will add more than 4,400 homes in the adjoining communities of Waikapu and Waiale, increasing the potential for urban sprawl.

Longtime Wailuku resident Jill Engledow explained that immediately after World War II, planners of the "New Kahului" indicated they did not intend to blur the division between the two towns.

"Obviously that didn’t work out," she said. "The area between Kahului and Wailuku was supposed to remain open space, but with the exception of some steep dunes, park areas and playing fields, it’s pretty much developed now. The little mall (across from Baldwin High School on the lower edge of Wailuku) where the new Safeway is going up was the last undeveloped open space dividing the towns."

The advancing development is obliterating the last remnants of Central Maui’s ancient landscape, according to Engledow, author of several award-winning travel and history books about the Valley Isle. The extensive dune system has been almost entirely covered by development.

"Back in the late 1700s, these dunes in the Sandhills area provided cover for the army of Maui Chief Kahekili, allowing them to defeat the Hawaii island Chief Kalaniopuu in the battle of Kakanelua," Engledow said.

"Every time I drive through those dunes I imagine all those Maui warriors springing out to fight the invaders. I doubt the dunes will be with us for long. The Central Maui plateau has been leveled over the past couple of centuries by farming, sand mining and development, and these will be gone too."

Engledow conceded that the surrounding new housing developments are restoring essential commercial activity to Wailuku, such as grocery and variety stores, that abandoned the town when the island’s business epicenter shifted to Kahului.

"Now some of those basic businesses are coming back, not to the core but to the edges of Wailuku town. At least we won’t have to brave the Kahului traffic lights for every little necessity," she said.

While some old-timers lament the loss of identity and open space, others view the growth as an opportunity for young families to remain on the island or come home from the mainland. Arisumi, the retired union official who now lives in Kula, welcomes most of what has come with the recent evolution of Kahului.

"The fish market, the railroad — those are all gone. The town is all built. It’s unbelievable," he said. "To me, it’s progress. It’s good for everybody."

So just who are all these new homebuyers?

County officials and developers say they are young families moving out from their parents’ homes and from rentals, as well as empty nesters and retirees looking to downsize. Maui County Planning Director William Spence attributed Maui’s steady population growth in recent years to "natural" growth in the local population, not to newly arrived malihini from outside the state.

"Everybody goes to high school graduations, and those kids are going off and getting married and having families of their own. That’s the majority of how Maui is growing," he said. "We pretty much have to provide for them."

Lezle and June Molina moved out of a Kihei rental when they bought a townhouse at Kehalani Gardens five years ago and are eagerly watching as new stores and other businesses open up on commercial lots in Kehalani and Maui Lani Village Center. Tenants so far include Longs Drugs, Marmac Ace Hardware, Wailuku Federal Credit Union and professional and medical offices. Walgreens and Foodland are expected to join the mix.

"I love Wailuku and I just want to see it grow," said Lezle Molina, 37, a receptionist for Clinical Laboratories in Kahului. "It’s amazing. It gives us more options for shopping. I don’t think it’s too much. Honestly, I think we need it."

The Molinas accompanied son Kaleb, 6, to the first day of second grade at the newly built Pu‘u Kukui Elementary School, which opened last month in the portion of Kehalani above Honoapiilani Highway.

The school was built for 550 students but had an enrollment of 560 on opening day.

"When they were designing the school in 2006 or 2007 and they looked up here, I don’t think they realized that it was going to grow this much," said Principal Chad Okamoto, 45, who moved his family to Kehalani in 2001.

Maui Lani has its own public elementary school, Pomaika‘i, which opened in 2007.

Across the street from that campus is Maui Lani’s fifth and newest subdivision, D.R. Horton-Schuler Division’s 143-unit Traditions, a small-lot development with a colorful playground featuring water jets.

Holley Turpen and her family are waiting for the loan to close at the end of this month on the three-bedroom home they purchased there for less than $400,000. Turpen, 28, was born and raised on Maui but lived in Colorado for 10 years. Turpen and husband Matthew, a National Guardsman and Maui Police Department recruit, moved to Maui in November after the birth of their son, Micah, now 17 months old.

"When we had a baby we decided we wanted our child to be raised on Maui with my entire family around," said Turpen, a substance abuse counselor for Maui Youth & Family Services.

The young family live with Turpen’s parents in Waiehu Terrace and figured buying a home was not in their immediate future. But with mortgage rates at historic lows and a surge of new development in Central Maui, "we decided to take a look and fell in love with it," she said. "We ran the numbers and we decided to go for it.

"We assumed it would be at least five years before we would be able to find anything in our price range. From what we looked at as far as new development versus existing homes, the prices are not close at all."

Turpen said she likes the family-oriented feel of Traditions — the playground, walking trails and its proximity to the elementary school.

The very things that attract families to the massive master-planned developments — close-knit communities, miniparks, neighborhood stores, walking and bike paths — are in many ways a throwback to the plantation-era lifestyle, according to Spence, the county’s planning director.

"I don’t think anybody ever talks about how they liked the plantation camps for the conditions. They remember the camaraderie and they remember being able to walk to the store and how close they were to their neighbors and how everybody watched out for everybody’s kids," he said.

"The trend across the nation is that residents are looking for more identifiable areas — a sense of place, not just convenience — and the effort in urban design is to create a sense of place. It’s the rebirth of an old idea."

Despite their massive sizes, Maui Lani and Kehalani largely escaped substantial opposition over the 20 to 30 years the projects have been in their planning and buildout phases.

One reason might be that the buildout of the projects has been gradual because of the island’s smaller housing market, said Kehalani developer and Maui boy Stanford Carr. This has given the public time to get used to the master-planned developments and allowed developers and the county to cope with added infrastructure, environmental and public service needs.

Arakawa said it makes sense that large-scale residential development has been focused in Central Maui where there is ample land, adequate water, easy access to the island’s transportation, government and commercial centers, and a location that is convenient to other population centers.

"Kahului was designed for expansion," he said, with development growing in a curvilinear "wagon wheel" pattern out from A&B’s Kahului Shopping Center near the harbor front.

Arakawa said Maui is budding at "a comfortable and consistent rate" with "a lot of room to grow."

"Maui is planning its community so it does not sprawl the way Oahu did," he said.

Warning of the danger of sprawl in the Kahului-Wailuku region, the Maui Island Plan approved by the County Council in December designates "urban growth boundaries" to accommodate future development. The plan recommends use of regional parks, greenways and protected areas to maintain separation between the projects, and the county already is moving ahead to purchase large tracts of land for open space and recreational uses.

The original Dream City remains a diverse working-class town with a large Filipino community — about 30 percent of the population, according to the U.S. Census Bureau — and newer immigrants from Samoa, Tonga, Micronesia, Mexico and Latin America. (Foreign-born residents make up 27 percent of the population in Kahului.)

Many of the large house lots have been built out to their property lines and the cinder-block homes are topped with second-floor additions to accommodate multigenerational living.

But Kahului remains without an identifiable downtown core. A&B has yet to pull the trigger on its Kahului Town Center, first announced in 2005 but put on hold when the market tanked. The project would redevelop the old Kahului Shopping Center into a mixed-use project with 440 condominium units. The same goes for its adjacent 103-unit ‘Aina O Kane. (A&B officials said in an email they are "re-evaluating the commercial component given the number of new/announced retail entrants in the area.")

In the meantime, the company has been busy developing its 255-acre business park on former agricultural land at the eastern edge of Kahului that has changed how Maui shops. A retailing juggernaut stretching from Kahului Airport to Puunene Avenue comprises Costco, Kmart, Lowe’s, OfficeMax, Old Navy, Sports Authority, Walmart, Home Depot and others. Target will join the lineup on a 24-acre parcel that is being sold to Safeway.

If there’s a symbol of the old Kahului, it’s Ah Fook’s Supermarket. The store, started in 1917 by Chinese immigrant Tam Ah Fook, was one of the first tenants in the Kahului Shopping Center when the retail complex opened in 1951 as the hub of Dream City.

For almost 60 years, Ah Fook’s was a gathering place for locals seeking groceries, produce, bentos, fresh fish, bakery products, cut flowers and Asian specialities. The outdoor mall had become something of a relic by 2005, when a fire gutted the market. At the urging of loyal customers, store owner Raymond Hew reopened Ah Fook’s in a smaller space fronting busy Kaahumanu Avenue that is a quarter of its former size.

Even in the smaller space, Ah Fook’s continues to draw a steady trade.

"The face of Kahului has changed a lot with the chain stores and development of new shopping centers," said Hew, 65, who was busy cutting fish when a reporter called. "But there’s still a feel of its own. There’s still that local character, that local flavor."

Yet like so many others, Hew has found appeal in the new Kahului. In 2002, he left the Sandhills neighborhood in Wailuku to buy a home in Maui Lani’s The Island — the region’s first gated community.

"I like the idea of a planned community, with rules and regulations that people have to follow, and that they abide by quiet times," he said. "I come home and it’s real peaceful.

"Although I miss the mango trees."