A state agency has selected a team of developers led by San Diego-based OliverMcMillan Inc. to turn the biggest undeveloped piece of the Villages of Kapolei into a residential and retail neighborhood that could begin to take shape in 2016.

The Hawaii Housing Finance and Development Corp. recommended the team in response to a request for proposals issued in March, and the board of the agency that facilitates affordable-housing development in Hawaii approved the selection Thursday.

There had been three interested developers, but the team led by OliverMcMillan was the only one to submit a bid to develop the 27-acre property owned by HHFDC makai of Walmart, according to the agency.

Kris Hui, OliverMcMillan’s senior project manager, said in a statement that the company, which is building the Symphony Honolulu condominium tower in Kakaako, was honored to be selected.

"OliverMcMillan has enjoyed doing business in Hawaii, and we are committed to the future here," he said.

The developer’s $143 million conceptual plan includes 414 homes, of which 210 would be affordable to low- and moderate-income buyers and renters, as well as 154,000 square feet of commercial space envisioned to include a grocery store, drugstore, shops and restaurants. A1.2-acre village green is also part of the plan.

OliverMcMillan is the master developer of the project, and enlisted Hunt Cos. and Urban Housing Communities LLC to develop the affordable-housing pieces.

Under the plan, 168 homes are to be rentals affordable to households earning between 30 and 60 percent of Honolulu’s annual median income, which equates to $28,750 to $57,480 for a family of four as calculated by HHFDC.

Another 42 homes would be for sale to households earning 80 to 120 percent of the median income, which equates to $76,650 to $114,960 for a family of four.

The rest of the homes — 170 rentals and 34 for sale — would be market-priced.

Moving ahead with construction requires successful negotiation of a development agreement between OliverMcMillan and HHFDC that includes lease and sale terms for the land.

OliverMcMillan proposes to pay about $1 million a year to lease the land for commercial use and rental housing, and pay about $5 million to buy the land to be developed as for-sale housing.

The developer projects that producing a development agreement could take up to a year.

If an agreement is reached, OliverMcMillan anticipates that construction could begin in late 2016 on an initial phase of 96 affordable rentals, with full build-out in 2019.

Paul Buss, president of OliverMcMillan, said in a statement that the company will gather feedback from the community to help create a detailed vision for the project.

"We have just begun our work in creating another special place in Kapolei," he said.

The property, which partially borders homes and the Kapolei Golf Course, has been envisioned for various kinds of development for more than 20 years.

Originally the site was intended for a commercial center, a church, a park-and-ride lot and senior housing as part of a second phase of Villages of Kapolei, according to a 1988 environmental impact statement.

However, development plans shifted, and as the state’s master-planned community on 888 acres grew with 4,000 homes, a golf course, three schools, parks and other facilities, the parcel now referred to as the "Northwest Corner" was left undeveloped.

The city rezoned the site in 2001 to allow commercial and residential development. Yet the property sat vacant and has been used for fairs and other gatherings.

HHFDC Executive Director Craig Hirai said in a statement that the site will be a gathering place and define the gateway for Villages of Kapolei.

"We look forward to collaborating with the OliverMcMillan development team to create a vibrant, mixed-use urban village,"he said.