The state is trying to fast-track plans to develop a $70 million veterans home mostly funded by the federal government, but a last-minute decision on where to build the facility has created a backlash.

Hawaii’s Office of Veterans’ Services wants to build the 120-bed facility on a remnant of the former Aiea Sugar Mill site that the city bought 16 years ago to help preserve the area’s plantation heritage.

State representatives said they needed to secure a spot for the veterans home to avoid losing $40 million in federal funding after the University of Hawaii withdrew a considered site it owns near Diamond Head.

But the new location is opposed by some Aiea community leaders who worked for more than a decade to redevelop the former sugar mill property for community uses, including a town center.

“I ask that you please stop,” said Kehaulani Lum, an Aiea Community Association member. “To do this is to really take the light out of the community.”

Lum commented on the plan during an Oct. 8 Aiea Neighborhood Board meeting at which state representatives made their first public airing of the veterans home project.

Some community members said they felt ambushed by the presentation and felt the state was pitting veterans against area residents who spent years developing a master plan for the site.

“I think this process that you presented here is really not pono (right),” said Andrew Kaufman, a UH College of Tropical Agriculture and Human Resources professor who helped Aiea residents with planning work. “The community has already been developing this for many, many, many years.”

Col. Ron Han, Office of Veterans’ Services director, apologized for the surprise and pledged to work with the community. “We’re not here to discount what the community has done,” he said.

The former sugar mill site, which was once part of Honolulu Plantation Co.’s 4,000-acre plantation, has a difficult history of redevelopment plans going back to 1994 when the then-owner of local retailer Crazy Shirts, Rick Ralston, bought the just-closed mill with the intention of preserving the historic site and using it as his company’s headquarters and factory.

Ralston paid Alexander &Baldwin Inc. $19 million for the 19-acre property but abandoned his plan in 1997 amid economic recession pressures. As an exit strategy, he demolished the mill that dated to 1898 and tried to interest others to develop the property as an industrial subdivision, shopping center or something else. Ultimately, Crazy Shirts lost the property to Bank of Hawaii in lieu of foreclosure.

The bank sold pieces of the site to recoup its loss, and the city bought 7 acres for $8.9 million in 2002. That deal was heralded as a victory for community leaders who initially tried to prevent demolition of the mill and then fought to preserve the vacant site for community uses.

Then-Mayor Jeremy Harris said at the time, “The purchase will allow us to move forward on a number of projects that preserve Aiea’s heritage and are part of its people’s vision for the future.”

Plans for the site included a community center documenting the area’s sugar plantation history, an outdoor performance area, art center, meeting rooms, retail shops, a sports field, a dog park and gardens as part of a “town center” on roughly half the property. The other portion was largely slated for senior housing tied to a requirement for federal funds the city used for part of the purchase.

A new public library also was part of the plan, and that facility opened in 2014 on 2 acres the state bought in 2003.

The vision for the site was documented in a 51-page master plan produced by design firm Group 70 for the city Department of Design and Construction, though obtaining money to fulfill the vision has been tough. As an interim use, the site has served as a park.

Meanwhile the state Office of Veterans’ Services produced a feasibility study in 2014 that showed Hawaii could use a third veterans home after the agency built one with 95 beds in Hilo in 2008 to compliment a 60-bed facility at Tripler Army Medical Center in Moanalua.

“It’s a very worthy project,” Han told the neighborhood board. “It’s one that’s much needed. In my estimation, there’s not enough we can do for veterans.”

The study indicated a need for 173 beds, and a vacant UH property between Leahi Hospital and Diamond Head Theatre appeared to be the spot after a couple years of discussions, Han said. Then, according to Han, UH pulled back, and confirmation came in August that Congress would provide $40 million for the facility if his agency had a site and construction drawings in hand and could pick a contractor by March.

Han said one alternative — to use land at UH West Oahu — would cost too much because it lacks infrastructure. The Aiea site was put forth as the only other viable option.

The state Department of Land and Natural Resources plans to acquire the site from the city, but Han and other project representatives told the neighborhood board they don’t know who exactly offered the property to develop the veterans home.

State Sen. Donna Mercado Kim and Aiea Neighborhood Board Chairman Bill Clark expressed dismay that the community wasn’t consulted earlier. Han said the recent board meeting was the first opportunity to share the plan with the community since the site was made available.

Claire Tamamoto, Aiea Community Association president, said she believes the state could develop the veterans home on an upper portion of the mill site instead of senior housing as a compromise that would still allow the long-envisioned town center.

“We do not want to see the (funding) from the federal government be lost, but there is no price tag any of you can put on this last parcel of community land that we have worked so hard to preserve for our community,” she said.