The developer of a planned $500 million regional shopping center in Kapolei has signed a 65-year lease with the state Department of Hawaiian Home Lands, overcoming a major hurdle for the ambitious project.

An affiliate of Florida-based DeBartolo Development started the lease Monday, following three years of deferrals that had raised some questions about whether the project called Ka Makana Ali’i would be built.

"We have worked closely together with DHHL to ensure this project delivers lasting value to not only the Native Hawaiian community, but also the residents of West Oahu," Edward Kobel, DeBartolo’s president and chief operating officer, said in a news release. "The long term lease of the Ka Makana Ali’i site will create a dependable revenue stream for native Hawaiian beneficiaries for decades to come."

The developer still has to obtain financing, which previously was a condition for a lease. DHHL recently agreed to give DeBartolo until May 31 to secure what is expected to be a $167 million loan from a national lender.

If financing and construction proceed as expected, a $285 million first phase with 750,000 square feet of space including Macy’s, Forever 21, H&M, a cinema and a hotel is scheduled to open on 50 acres in 2016.

A second phase would add another almost 700,000 square feet including retail, a second hotel and office space on 17 additional acres of the overall 67-acre parcel owned by DHHL.

Grading and grubbing activities are slated to begin this month. The project is expected to create an estimated 3,000 jobs during construction.

If both phases are built, Ka Makana Ali’i would become the third-largest shopping center in Hawaii and the first regional mall built on Oahu in more than 30 years.

By comparison, Ala Moana Center is about 2 million square feet, and Pearlridge Center is 1.2 million square feet. Ka Makana Ali’i will be 1.4 million square feet, but that includes two hotels and about 200,000 square feet of office space.

Ka Makana Ali’i also could become the largest job center in the Kapolei area, with 6,500 long-term jobs created by businesses at the complex.

For DHHL, lease rent from Ka Makana Ali’i would become the biggest source of income for the agency, which is backlogged in its mission to provide homes for Native Hawaiians.

The developer said the 65-year lease for Ka Makana Ali’i will generate base rent totaling $400 million plus tenant percentage rent that could amount to another $400 million. The lease also could be extended to 85 years, putting DHHL revenue well over $1 billion.

"Reaching this critical milestone is an important step forward. The execution of this commercial lease with DeBartolo Development represents more resources to place native Hawaiians on the land and to sustain programs that support the success of our beneficiaries," Jobie Masagatani, chairwoman of the Hawaiian Homes Commission and director of DHHL, said in the release. "In addition to trust revenue, we look forward to the employment opportunities resulting from the construction and operation of the mall for our neighboring native Hawaiian homestead residents and the economic boost that this project will bring to the greater West Oahu community."

Developing such an ambitious project, however, has been full of challenges and delays.

Ka Makana Ali’i was announced in 2006 after DHHL selected DeBartolo through a competitive bid process. The mall’s opening was forecast for 2009, but lease negotiations and economic turmoil upset that timing.

Terms for a lease were agreed to in 2011. An environmental assessment was completed in 2012, followed by a state Land Use Commission approval finalized last year.

DeBartolo has continually stressed its commitment to the project, and paid DHHLfor the delayed lease, including $922,581 through 2012 and $1.2 million over the past 12 months.

In December 2013 the Hawaiian Homes Commission gave DeBartolo a last and final deadline of Nov. 30 to sign a lease.

As part of the effort to finance the project, DeBartolo formed a joint venture with an affiliate of a provincial Canadian government pension fund manager, OPTrust, to move the project ahead.

Under the signed lease, the DeBartolo-led venture will begin paying $292,400 in monthly lease rent that will amount to $3.5 million for the first year. The rental rate increases over a number of years.

A second phase on 17 acres would add $1.2 million more in lease rent annually if developed.

DeBartolo also has a right to opt out of developing the second phase within six years but would owe a termination fee ranging from $500,000 to $6.3 million depending on the timing of such a decision.

Kristen Consillio contributed to this report.