Plans for a long-delayed regional mall in East Kapolei won state Land Use Commission approval Friday, clearing a lingering regulatory hurdle that allows the project to stay on track for breaking ground early next year.

The mall, called Ka Makana Ali’i, had encountered several holdups in recent years, but the LUC hearing went relatively smoothly.

A few residents from Ewa Beach and Makakilo testified against the estimated $350 million project before commissioners voted 7-0 to approve 67 acres for the 1.4 million-square-foot open-air mall.

The hearing was sought because the LUC approved the site for development of a regional sports complex in 1999 under a previous state plan that included adjacent land. But that old plan was abandoned, and led to nearby development of the University of Hawaii-West Oahu campus, the Salvation Army Kroc Center and Hawaiian homestead subdivisions.

The state Department of Hawaiian Home Lands acquired the 67-acre site, and arranged in 2006 to lease the property to Florida-based mall developer DeBartolo Development LLC.

It was initially expected that the mall would open in 2009, but lease negotiations and economic tribulations affected the timing. An environmental assessment was completed in January.

Hawaiian Home Lands petitioned the LUC for the use change as landowner, even though the agency is exempt from land-use regulations.

The exemption created some contention between the agency and the city Department of Planning and Permitting, which asked the LUC to subject Hawaiian Home Lands to city approval power for urban design standards that govern things like open space, bike path connections, parking spaces and signs.

Craig Iha, a deputy state attorney general representing Hawaiian Home Lands, said the agency has its own urban design department and will confer with the city, though the agency is retaining its exemption rights under the 1920 Hawaiian Homes Commission Act.

Kathy Sokugawa, the city’s planning division chief, told the LUC that the city wants design approval authority because design discussions with Hawaiian Home Lands have been insufficient. "The process of consensual review is not working," she said. "We would like the ability to approve the plan."

Typically the city subjects development projects to design plan approval through the zoning process. But Hawaiian Home Lands is exempt from zoning and may develop the mall site under its existing agriculture zoning.

Development of farmland on the Ewa Plain has been a contentious issue this year with the 11,750-home Ho’opili project winning LUC approval in June, and that issue attracted some opponents to the mall hearing.

Some Ho’opili challengers, including Friends of Makakilo and Save O’ahu Farmlands organizer Kioni Dudley, told the LUC that Ka Makana Ali’i shouldn’t be approved.

"This project is just more unplanned urban sprawl," Dudley said. He said the mall should be in downtown Kapolei instead of in the middle of homesteads on the fringe of Oahu’s so-called "second city."

Victoria Cannon of Makakilo along with Ewa Beach residents Glenn Oamilda and John Bond also expressed opposition.

Two Kapolei residents — Georgette Stevens and Homelani Schaedel — testified in support of the mall project.

Schaedel said congestion in downtown Kapolei prohibits locating Ka Makana Ali’i there, and that a regional mall in East Kapolei will benefit area residents including homesteaders. She said Dudley’s comment that a mall doesn’t belong amid Hawaiian homes was insulting. "I’m offended by your comment," she said.

Ka Makana Ali’i is financially important to Hawaiian Home Lands, which will use lease revenue to further its mission to build homes for its beneficiaries.

The agency stands to receive more than $140 million over the first 25 years of the lease. Much of the rent, however, is backloaded.

Instead of paying $4.7 million annually over the first 10 years for all 67 acres, DeBartolo will pay $1.3 million a year for 18 acres making up an initial phase once construction starts.

The $3.4 million annual balance would be deferred, allowing DeBartolo to pay none of that in the first two years, followed by $1 million in each of the next four years. After six years all deferred amounts would be due.

The first phase will be 200,681 square feet filled by roughly 25 tenants, including Walgreens, 24 Hour Fitness, a supermarket, McDonald’s, Butterfly Ice Cream, State Farm Insurance and NailTek. Initial tenant openings are projected for 2014.

The second phase includes a major department store, other retailers and 200,000 square feet each of office space and hotel rooms. Previously, DeBartolo projected this component would open in 2015, but the developer said in June that it isn’t projecting the start of construction or completion of this phase.

DeBartolo retains 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.

If it is fully built out, Ka Makana Ali’i would rival the size of Oahu’s second-largest regional mall, Pearlridge Center.