A major Hawaii island landowner is seeking to expand the Puna community of Keaau with a project that could help provide badly needed house lots and homes to replace those destroyed by lava in May and June.

The plan by W.H. Shipman Ltd. proposes to add about 940 homes to Keaau, roughly doubling the number of residences in the area south of Hilo and 12.5 miles from where lava erupted inside the Leilani Estates residential subdivision near Pahoa.

Shipman has been working on its Keaau project for several years, so it wasn’t created to provide relief for people displaced by lava. But the plan called Keaau Village dovetails with county efforts to create a new place in Puna for people to live after about 720 homes near Pahoa and in Kapoho were destroyed by lava.

Details of the Shipman plan are in a draft environmental assessment published by the state Office of Environmental Quality Control last week.

Bill Walter, CEO of the kamaaina company, said the report was due to be published before the May eruption but got delayed.

“The eruption is very coincidental,” he said, adding that Keaau Village is a refined piece of a broader 2006 master plan for 16,000 acres of Shipman land in and around Keaau.

The administration of Mayor Harry Kim, which is working on its own plan for a new community in Puna to relocate the displaced, is supportive of the Shipman project.

“We are happy to see projects like this moving forward,” said Diane Ley, director of the county’s Department of Research and Development. “Additional new affordable housing projects such as the Shipman project are expected to have a measurable impact on the displaced population.”

Shipman needs several county approvals, including a zoning change to be considered by the County Council. But even if approvals are given, the company estimates it could be 18 to 24 months before construction on infrastructure could begin.

The company intends to sell lots to contractors and housing developers for home construction, and will maintain some control over how the new community looks so that it reflects the area’s past as a plantation village.

Keaau Village is proposed for 258 acres of mostly vacant land that was previously cultivated in sugar cane by Olaa Sugar Co. and successor Puna Sugar Co., which shut down in 1984. State and county land-use plans designate most of the area for urban use.

The property is in lava hazard Zone 3, which is the third-highest risk zone established by the U.S. Geological Survey. Leilani Estates and much of Kapoho are in Zone 1. There are nine zones on Hawaii island. The environmental report said the project site is on a lava flow that mainly occurred between 750 and 1,500 years ago.

The plan calls for about 400 multifamily homes integrated with commercial uses in a denser setting, and 540 single-family homes in a less dense and more rural setting.

Last year there were 797 homes in Keaau, according to the report.

Shipman said its plan would develop residential and commercial buildings in areas adjacent to existing neighborhoods including the Keaau Agricultural Lots subdivision and Keaau High, Keaau Middle and Keaau Elementary schools.

Shipman has been building up commercial uses on its land in recent years after establishing an industrial park in 1987. More recent commercial development includes a Hawaii Medical Service Association call center, offices, restaurants and a Longs Drugs store slated to open in October.

Walter said the commercial development has helped create a jobs base that supports demand for housing so more people working in Keaau can live there as can families with children going to schools in the community.

“We wanted to be sure as it developed it would be a compact town,” he said.

Shipman intends to develop Keaau Village in two phases, and estimates that it could take 10 to 15 years or longer to build out the community, depending on market demand.