The Department of Hawaiian Home Lands will break ground today on a major new development that will include not only hundreds of homes, but also its future headquarters, two commercial sites and a 4.4-acre park.

The development, East Kapolei I, will become DHHL's largest residential venture to date. The site is next to 'Ewa Villages and the proposed West O'ahu campus of the University of Hawai'i.

Lloyd Yonenaka, DHHL spokesman, said today's groundbreaking is in anticipation of the roads, drainage, water, sewer and other infrastructure for the 97-acre parcel.

Royal Contracting won the bid to be the mass grading contractor for the project, which has an estimated cost of $31.7 million.

Included with the price tag is a section of the Kapolei Parkway that will connect with the future North-South Road, which is expected to offer some relief to Kapolei and 'Ewa commuters seeking an alternate route to the H-1 Freeway.

Yet to be selected is a builder for the 403 single-family homes and other features in the project.

"Because the infrastructure is not done, it's really hard for (contractors)," Yonenaka said.

"If you want to bid on a project, you want to know where everything is going to be, how they're going to lay the subdivision out."

Construction of homes won't begin for another 18 months to two years, he said.

East Kapolei marks the third segment of DHHL's foray into O'ahu's planned Second City. The agency is now in the second of three phases in the Kaupe'a subdivision, which consists of 326 single-family homes between Kapolei High School and Kapolei Middle School.

Also on DHHL land is the 156-lot Malu'ohai subdivision, which includes 45 parcels where residents helped build the homes in exchange for a lower purchase price. It was developed by Menehune Development Co. with the help of Honolulu Habitat for Humanity.

The agency is also seeking a developer to build a major shopping center — one that would rival Ala Moana Center in square footage — on an additional 67 acres under DHHL control just south of Kapolei I.

DHHL is tasked with the federal mandate to place qualified Hawaiians on land set aside for them. The agency wants to award 6,000 statewide residential leases to Hawaiians by 2010.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com.