The state Department of Hawaiian Home Lands has selected a Florida company led by Edward J. DeBartolo Jr., former owner of the San Francisco 49ers, to develop a regional shopping center in Kapolei projected to open a first phase in 2009.

The department reached a preliminary deal with the Tampa-based DeBartolo Development LLC to lease 67 acres of agency land for the project. The shopping center is envisioned to become the single-largest job center in the Kapolei region, and perhaps rival the size of the state's largest mall, Ala Moana Center, which sits on 50 acres.

DeBartolo is a billionaire entrepreneur who in 1998 pleaded guilty to a felony charge of not reporting an alleged $400,000 payment to former Louisiana Gov. Edwin Edwards, who sought the money in exchange for a riverboat gambling license. DeBartolo received two years probation, agreed to a $1 million fine and testified against Edwards, who received a 10-year prison sentence.

Hawaiian Home Lands department spokesman Lloyd Yonenaka said DeBartolo's conviction has no bearing on the Kapolei project. "They are a reputable company," Yonenaka said.

Micah Kane, Hawaiian Homes Commission chairman, said the shopping center will be a boon to Kapolei and the state.

"This is really an opportunity for DHHL to successfully add a huge economic component to the ahupua'a of Kapolei," said Kane. "It is going to bring a whole lot of new money into this state."

If finalized as expected, the lease and development agreement for the shopping center would become the single-largest revenue generator for the DHHL, an agency benefitting Native Hawaiians.

Kane said he anticipates a first phase will open in 2009 after completion of the North-South Road running from the project site to the H-1 freeway.

DeBartolo Development is working on lining up tenants, but has yet to determine the size or design of an initial phase.

In a statement, Ed Kobel, DeBartolo Development president, said the company is "very excited about this project and about the vision DHHL has for the future of this region."

PROJECT SUPPORTED

Maeda Timson, chairwoman of the Makakilo/Kapolei/Hono-kai Hale Neighborhood Board, said a regional mall at the site would relieve traffic pressure from downtown Kapolei, where nearly all commercial activity has been concentrated to date.

"You not only provide people the chance to work in Kapolei and avoid the drive to town, but you also improve the traffic flow within the area," she said in a statement.

The project also is supported by the area's city councilman, Todd Apo, who said the shopping center and other nearby planned projects such as a University of Hawai'i-West O'ahu campus and relocated Hawaiian Home Lands department offices will help Kapolei fulfill its mission to become O'ahu's "Second City."

Kane said construction of the North-South Road and Kapolei Parkway extension to run past the planned regional mall will help reduce shoppers converging on downtown Kapolei as well as 'Ewa residents traveling to town via congested Fort Weaver Road.

"We want to make this area (near the mall site) the new piko (belly button) of the Kapolei region," he said.

The department projects that the region can sustain more than 1.5 million square feet of new retail space based on projections that the area will add nearly 50,000 homes and double its population by 2025.

RESIDENTIAL BOOM

Large-scale residential projects slated for the region over the next decade or so include about 1,700 Hawaiian Home Lands homes, 4,041 homes at UH-West O'ahu, 2,370 at West Kapolei, 11,000 to 13,000 at Ho'opili, more than 2,000 around the City of Kapolei and almost 5,000 more at 'Ewa by Gentry and Ocean Pointe.

The area also has significant planned retail additions, including Wal-Mart, Costco and a retail complex on 20 acres on the edge of downtown Kapolei called Kapolei Commons.

The Hawaiian Home Lands department owns about 700 acres in the region and plans to move its offices from Downtown Ho-nolulu to a new building under construction adjacent to the mall site by the end of next year.

The agency solicited developers for the retail project in February and received 392 inquiries, including interest from local developers Alexander & Baldwin Inc. and The MacNaughton Group, as well as major Mainland firms, including Ala Moana Center owner General Growth Properties.

Kane said only two firms made formal bids, DeBartolo Development and a smaller California-based regional mall developer, Acacia Real Estate Group Inc.

DeBartolo Development has several projects under development around the country, including a shopping neighborhood on 114 acres in Mesa, Ariz., and a town center with more than three million square feet of retail outlets, offices and apartments in Pasco County, Fla.

Despite DeBartolo's past troubles, the department added in a statement: "We feel good about working with DeBartolo Development. They have been very professional and sincere in their efforts to communicate and listen to our perspective, our Hawaiian perspective, as to what we see there and also how it fits into our mission to put more Native Hawaiians on the land."

STRATEGIC PLAN

The Hawaiian Home Lands department was created by the Hawaiian Homes Commission Act of 1921 to carry out the federal mandate of placing qualified Hawaiians on land set aside for them.

The agency receives $30 million a year from the Legislature as part of a land settlement, but that payment ends in 2013 and the agency is executing a strategic plan to become financially self-sufficient by then.

Under the arrangement with DeBartolo Development, the agency would receive minimum annual rent averaging about $5.6 million over the first 25 years, though rent could be higher based on a percentage of mall tenant rents. At the minimum, the agency would earn more than $141 million over the first 25 years of the 65-year lease.

Kane said the retail center lease rent equates to nearly half of the agency's current commercial lease revenue of $12 million a year.

The agency's largest existing commercial lease payment is $1 million a year for land under Waiakea Center in Hilo. The Big Island's largest shopping center, Prince Kuhio Plaza in Hilo, generates $500,000 a year in rent revenue for the agency.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.