Maui County hopes to help meet affordable work force housing needs on Läna'i over the next couple of decades with a 412-home project that will expand the boundary of rural Läna'i City.

The project is envisioned to expand what has been limited new housing construction on the island where many, if not most, homes were built in the 1930s and 1940s when Läna'i was primarily a pineapple plantation.

Castle & Cooke, which owns 98 percent of Läna'i, has added some new work force housing in recent years, while the state Department of Hawaiian Home Lands is presently developing a subdivision of homes on the island for Native Hawaiians.

A Maui County survey of Läna'i residents suggests more long-term demand exists for moderately priced new homes.

According to the survey, 41 percent of respondents rent housing, much of which is owned by Castle & Cooke. The county, which also paid for a housing market analysis, concluded that two- or three-bedroom residences would be most desirable at prices between $100,000 and $300,000.

The market analysis said many Läna'i residents in recent years have been priced out of the market as the median sale price for single-family homes on the island rose from $132,500 in 1999 to $425,000 in 2007.

Kay Okamoto, a longtime Läna'i resident who is also owner and principal broker of Okamoto Realty LLC, says there is considerable demand from young families who would rather not live with their parents or in a 70-year-old plantation house.

"I think there's a substantial demand," she said.

Still, there is some uncertainty about how new homes would be absorbed given the unpredictable cycles of tour-ism and luxury vacation home development that drive the island's economy and are presently weak.

Many current and former employees of Castle & Cooke receive company-subsidized rents, which presents another dampening factor on new housing demand.

Maui County's plan is to start with an initial phase of 58 single-family homes and 23 townhomes. Some of the townhomes would be available as rentals. A 3-acre park and land for a future community center are also part of the initial phase of work.

The single-family homes in the as-yet-unnamed planned subdivision are designed in the same architectural fashion of existing homes on the island. Two-story townhomes also are designed to reflect the character of the former plantation community.

Full buildout of the project, with 239 single-family homes and 173 townhomes, is projected to take 17 years.

Construction of the first homes isn't expected for at least three years because of permit procedures, according to JoAnn Ridao, deputy director of Maui's Department of Housing and Human Concerns.

The department recently filed a draft environmental assessment for the project, and will seek approval from the state Land Use Commission to redesignate the land from agriculture to urban use. The project would be exempt from county zoning.

Financing construction is another factor that could affect when the first phase gets built.

Maui's Housing Department estimates it will cost $23 million to equip the land with infrastructure such as roads and utilities. Ridao said the county will seek federal financing assistance for the infrastructure work, and then issue a request for proposals for private developers to build homes.

"As it stands right now, the county doesn't have the money," she said.

Lloyd Yonenaka, Hawaiian Home Lands spokesman, said there is potential for the department to share infrastructure development costs with Maui County.

The DHHL project is on 50 acres next to the Maui County parcel. The department received 50 acres from Castle & Cooke in 1999 with a condition to build 25 homes by this year. So far, DHHL has spent $6.6 million to provide infrastructure on about 15 acres for 45 homes, and 27 homes have been built.

The Maui County site has long been set aside for affordable housing. The 73-acres are part of a 115-acre parcel Castle & Cooke conveyed to the county in 1998 as a condition for a 1992 zoning approval related to its Koele resort plan.

About 42 acres of the 115-acre site is for future expansion of Läna'i High and Elementary School.

Like much of Läna'i, the vacant parcel is fallow farmland that once was part of Hawai'i's largest pineapple plantation. Castle & Cooke, owned by billionaire David Murdock, ended pineapple farming on the island in the early 1990s and opened two luxury hotels, the Lodge at Koele and the Manele Bay Hotel.

Over that time, Läna'i's population has grown from 2,426 in 1990 to 3,193 in 2000. The Maui Planning Department projects the population will be 3,735 next year and 4,308 by 2020.