The developer of a $1 billion master-planned community on the Big Island is seeking more time to meet a deadline for delivering affordable homes, though a state agency opposes the move.

DW Aina Le’a Development LLC, developer of The Villages of ‘Aina Le’a, proposed for 2,300 homes near Waikoloa, recently petitioned the state Land Use Commission for a two-year extension to deliver 385 affordable homes.

The company faces a Nov. 17 deadline to complete the townhomes under a requirement that was set five years ago and represented a dramatic reduction in the number of affordable homes promised by a previous developer of the 1,060-acre property.

DW Aina Le’a now proposes delivering 190 affordable units by the end of next year and the other 195 by the end of 2012.

Bob Wessels, managing partner for DW Aina Le’a, said the schedule is based on anticipated demand for the three- and four-bedroom homes priced from $320,000 to $345,000.

Wessels said contractors could build units faster, but they likely wouldn’t be absorbed by the market.

The state Office of Planning, which contends the developer already missed an earlier deadline to deliver 16 of the homes by March 31, is "unalterably" opposed to an extension.

"If the commission doesn’t enforce on (DW Aina Le’a), then basically it’ll send a message to everyone that they don’t have to worry about meeting commission conditions," said Abbey Seth Mayer, director of the Office of Planning, which represents the state before the Land Use Commission.

Mayer’s office is recommending that the property revert to agricultural use.

The developer contends the deadline was unfair, and that previous LUC actions and unforeseen permitting delays hurt the project.

Hawaii County has been supportive of Aina Le’a and its efforts to develop the affordable housing and broader community that includes two golf courses, a regional shopping center, public school and 26 acres of park space.

The LUC is expected to consider the developer’s extension request at a public hearing Nov. 4.

The upcoming decision is the second time in two years that development of the site has been in danger of being canceled, though development of the property has struggled for more than two decades.

The site initially was slated for 2,760 homes by Signal Puako Corp. in 1987. In return for LUC approval to convert the agricultural land for urban use, the developer promised to sell 60 percent of the homes as affordable units.

In 1991, the plan was amended by Japanese firm Nansay Hawaii Inc. to develop 1,550 homes and six golf courses.

Nansay, however, ran into financial trouble and Hawaii’s flagging economy in the early 1990s, and managed to build only about 100 affordable homes.

The land was sold at foreclosure in 1998 and acquired a year later by an affiliate of Bridge Capital, a real estate and lending company based in the U.S. Virgin Islands.

In 2005, Bridge Capital convinced the LUC to relax the affordable-housing requirement to 20 percent from 60 percent, arguing that the higher bar made development cost-prohibitive, resulting in no affordable housing.

Bridge Capital suggested it would build 385 affordable homes within three years, though the LUC set a five-year deadline.

Construction was anticipated to begin in early 2006, but Bridge Capital said it encountered unforeseen permitting delays, including a new requirement in late 2007 to produce an environmental impact statement in the wake of a legal ruling over the Hawaii Superferry.

In April 2009, the LUC voted to cancel development approval due to insufficient progress on the project.

Bridge Capital asked the commission to reconsider, and said it had sold part of the property to DW Aina Le’a to help advance affordable-housing construction. The LUC put its cancellation on hold last September, but imposed a March 31, 2010, deadline to complete 16 affordable homes.

The 16 homes were built by the deadline, but still lack connections to roads or utilities.

In a filing with the LUC, Bridge Capital said the commission never defined "complete," and contends it has satisfied the deadline.

Mayer disagrees. "There’s no roads, no water, no sewer," he said. "They’re a long ways off."

Bridge Capital claims that imposing a deadline in the first place was an unfair requirement not placed on other projects, and that the LUC’s initial vote to cancel development approval caused financing and construction problems.

DW Aina Le’a said it has invested $20 million in infrastructure construction, and is also financing development by selling stakes in the land to investors with a guarantee to repurchase the stakes for a 30 percent premium after 30 months.

Wessels, of DW Aina Le’a, said 40 to 48 of the townhomes should be ready for occupancy by April 2011.