A plan to integrate educational facilities and affordable housing for a new community for underprivileged Leeward residents has fallen apart.

Developer Jeff Stone — who agreed last year to donate 300 acres in Makaha Valley for the project — has withdrawn his offer.

The deal’s unraveling shocked community leaders who had high hopes for the innovative plan, which was announced early last year and hailed as a dream come true.

Kamehameha Schools, the state Department of Hawaiian Home Lands and Stone were partners in the so-called learning community.

The plan called for 400 to 600 affordable houses to be built by DHHL for Hawaiians and connected with educational enrichment facilities Kamehameha Schools would develop for Hawaiian and non-Hawaiian children ranging from preschoolers to young adults along the Leeward coast. Stone committed to donate the 300 acres, including and surrounding Makaha Valley Country Club, giving 66 acres to Kamehameha Schools and 234 acres to DHHL.

The three partners have different views on why the land gift is being withdrawn.

According to Stone, DHHL failed to accept its piece of property by a Feb. 11 deadline, and though DHHL asked for an extension to Aug. 30, Stone said the agency didn’t follow up on its request.

"It kind of went dark," Stone said, referring to communication with DHHL since January. "We expected to get something new in writing from them."

DHHL spokeswoman Crystal Kua said Stone refused the extension request. "We asked him for an extension, and he said, ‘No,’" Kua said, adding that DHHL encountered some delays in examining the property but is now ready to sign a deed accepting the land by June 30. She also said DHHL has $3 million in next year’s budget for planning and design work for the houses.

Kamehameha Schools was ready to accept its piece of the property in February, but that was contingent on DHHL taking its piece.

Because of the breakdown between Stone and DHHL, Stone notified Kamehameha Schools last week that his gift was no longer justified.

Stone, who owns the golf course commonly known as Makaha-East and is also the master developer of Ko Olina Resort & Spa, said Wednesday that if DHHL can indeed accept the land gift by June 30 then he will complete the land transfer. "My gift and commitment is still very sincere," he said.

Sen. Maile Shimabukuro, (D, Ko Olina-Nanakuli-Maili-Waianae-Makaha-Makua), said it was hard to understand how a partnership with such good and charitable intentions could break down. "That’s really bizarre," she said. "It’s an unfortunate loss for the community."

"It’s sad, just sad," said Mervina Cash-Kaeo, president and chief executive of Alu Like Inc. and a lifelong Nanakuli resident. "There was so much promise."

Some observers believed the land gift was a done deal. Stone had presented a signed grant at a ceremony in Gov. Linda Lingle’s office on April 7, 2010, and emphasized that the donation was unconditional.

"This is a pure gift to Kamehameha Schools and DHHL with no strings attached," Stone said at the ceremony. "This will change the lives of future generations of this community."

However, a legally binding agreement to donate the land had previously been signed, and included some rights Stone reserved to terminate the gift agreement.

Conditions of the deal included provisions to insure that Kamehameha Schools and DHHL fulfilled their plans as presented to Stone instead of doing something else with the property.

Much time and money has been invested by all three parties to advance the plan, which has been under discussion for close to three years. Since April 2010, Kamehameha Schools and DHHL conducted due diligence studies of the land, and published an environmental assessment.

Construction was to begin in 2013, with Kamehameha Schools, a nonprofit educational trust, pledging to invest up to $100 million or more on its piece of the project.

Elements of the eductional complex included multimedia and computer facilities, language immersion programs, a library, teacher learning center, a dining hall, athletic fields, a pool and a working taro loi and indigenous gardens for learning about the culture and business of farming.

The facilities weren’t intended to be an extension of Kamehameha Schools’ network of campuses for Hawaiian children. They were envisioned to largely serve as an enrichment program for area public school students.

The learning complex also was projected to create up to 300 jobs, according to Kamehameha Schools.

DHHL’s adjacent housing component would have allowed Hawaiian families to more closely interact with the learning complex, creating a kind of modern-day ahupuaa, or system where the community uses and cares for natural resources along a strip of land from the mountains to the sea.

The contribution of Stone’s property, which is valued at about $7 million for property tax purposes, was key because Kamehameha Schools owns no land on Oahu’s west side despite being the state’s largest private landowner.

Kamehameha Schools wants to extend its mission for educating Hawaiians beyond its existing campuses and to an area with the state’s largest concentration of Hawaiians.

Dee Jay Mailer, chief executive officer of Kamehameha Schools, said last year that the deal with Stone was "as though a dream was coming true."

Mailer, in a statement Wednesday, said the organization’s commitment to developing a learning community on the Leeward coast is unwavering.

"Our plans to support this community have and will not change," she said. "We will continue to look for a site or sites to build KS facilities that will greatly complement the educational programs and services being provided. Our support of the public schools from pre-K to college and the integration of vital programs and services on the coast also remain intact."

Alapaki Nahale-a, DHHL’s director, issued a statement, expressing disappointment that the Makaha Valley project won’t be moving forward.

He added that the agency remains committed to seeing the vision for Makaha Valley realized.

"With a state-of-the-art learning center at its heart, surrounded by a viable, supportive homestead community of Native Hawaiians, this initiative was visionary at its inception and is an approach that we believe will help to foster healthy Hawaiian communities," he said.