A plan to build Waikiki’s first new oceanfront hotel in more than 30 years prevailed in a zoning challenge Thursday, freeing the project to proceed after a nearly two-year skirmish before the city Zoning Board of Appeals.

The Zoning Board unanimously voted to uphold a December 2010 decision by the director of the city Department of Planning and Permitting that granted Kyo-ya Hotels & Resorts a zoning variance to replace an eight-story wing of its Moana Surfrider Hotel with a 26-story tower.

Four environmental and community groups — Hawaii’s Thousand Friends, the Ka Iwi Coalition, the Surfrider Foundation and KAHEA: The Hawaiian-Environmental Alliance — had appealed the variance decision to the Zoning Board over a variety of concerns, including negative impacts on views and shadows on the beach.

Project opponents argued that the variance flouts well-established ground and height-setback rules intended to protect open space fronting Waikiki Beach.

The appeal was filed in January 2011. Hearings were beset by long delays, procedural arguments and testimony by witnesses and consultants.

But ultimately the Zoning Board noted that its role isn’t to second-guess merits of a discretionary decision by city Department of Planning and Permitting Director David Tanoue. The five-member board concluded that the only issue it could legally consider was whether Tanoue’s decision was based on any erroneous facts.

"The (appellant) did not meet its burden that the director’s decision was based on a material misstatement of fact," said commissioner Lyle Ishida.

Kyo-ya had argued that a variance was appropriate because zoning rules and an unfulfilled commitment by the state to widen the beach limited the company from improving the use of its land.

Under zoning rules, hotels must be at least 100 feet from the shoreline. The eight-story Diamond Head Tower wing of the Moana was built before that rule was adopted, and encroaches on the 100-foot setback area.

The proposed new tower would be closer to the shore compared with the existing hotel, though the amount of beach fronting the hotel won’t change because an existing sea wall will remain in place.

There also is a requirement that building facades along the beach step back farther from the ocean the higher they go. This rule is intended to prevent a flat curtain of towers hugging the beach.

Kyo-ya contended that its proposed tower would comply with both setback requirements if the state hadn’t failed to widen the beach under a 1965 agreement that called for adding sand to move the shoreline seaward by 180 feet. As part of the agreement, Kyo-ya deeded ownership of beach fronting its hotel to the state.

The company also said its plan would generate economic benefits that enhance Waikiki, and that mauka-to-makai views and public access to the beach will increase because the new tower has a narrower profile than the Diamond Head Tower.

The City Council voted in August 2010 to approve the project as part of a $700 million master plan that includes building a new 33-story tower and renovating an existing 29-story tower on the site of Kyo-ya’s neighboring Princess Kaiu­lani hotel.

The tower replacing the Moana’s Diamond Head Tower would house about 100 residential condominiums and 60 hotel rooms.

Kyo-ya issued a statement Thursday saying it was pleased with the Zoning Board’s ruling, which it said reaffirms its belief that the Diamond Head Tower redevelopment is the "right thing to do" for the Waikiki community, the tourism industry and its 3,500 employees.

The ruling gives Kyo-ya a green light to proceed. However, Linda Paul, an attorney representing the coalition of opponents, vowed to further appeal the case in Circuit Court.

That promised move could cause Kyo-ya to hold off on construction. Kyo-ya would not clearly address whether it would proceed with construction before a court appeal is decided.

"There is no date set yet for start of construction, as the petitioners have signaled their intention to appeal," the company said in the statement. "Kyo-ya looks forward to resuming its development plans to continue the revitalization of Waikiki."