The decision reclassifies agriculture land for urban use for the development. The commission also required that the developer and the state Department of Education build area schools in a timely manner as homes are built. The commission last week proposed requiring the schools be built before homeowners move in.

Castle & Cooke and DOE hammered out an agreement this week in which the developer will help design and build the schools and the state will reimburse the company for the cost. The nine-member commission needed six votes to pass the entire proposal. One member excused himself because of a conflict of interest and another was absent.

State Deputy Attorney General John Chang said the state supports the idea that a developer accommodate the community's education needs as part of basic infrastructure along with roads and sewage.

"If the developer were to sell out and have all units for sale, I can understand this condition," Chang said. "The timing that is proposed may be a little too early, we're looking for something in between."

DOE officials also believe developers should not shoulder the entire cost of building schools. They welcome the idea of having the developer pay up front for school construction, with the state later repaying the builder in school or leasing the campus.

The commission added the school construction proposal after Central O'ahu residents brought up concerns over traffic congestion and overcrowded schools in the fast-developing area.

Last week, the commission denied construction of an additional 485-acre parcel at Koa Ridge Mauka.

The state needs to spend $2 billion on school construction in the next 10 years to keep pace with demand in developing parts of O'ahu and Maui. That would be about $200 million a year, but the Legislature the past several years has had to keep the annual budget at around $45 million – leaving the Department of Education and the Department of Accounting and General Services far short.