"Fairy terns are critically endangered," the commissioners' decision said, citing nesting at only four North Island sites, one of which is the Mangawhai Wildlife Refuge, 100m north of the development site. New Zealand Dotterels were another focus of the hearing.
"The local fairy tern population is eight to 10 breeding pairs and the total world population is around 30 to 40 birds.
"The New Zealand dotterel is more numerous with around 2200 individuals here," the decision said.
The Te Arai area is home to a number of threatened or endangered flora and fauna species but a shorebird management plan had been prepared with sign-off from the Department of Conservation, the Environmental Defence Society and the Royal Forest and Bird Society.
Evidence was presented of how human intervention helped manage pests such as rabbits, cats, rats, mustelids, possums an hedgehogs.
The fairy tern's survival was dependent on human intervention and without that, the species would become extinct in the short term, the decision said.
The development is on Maori land and Te Uri o Hau Settlement Trust chairman Rawson Wright said approval was hugely significant for the hapu, after years of opposition to any development.
Te Uri o Hau bought the 616ha Mangawhai North Forest in 2002 as part of the commercial redress package for Treaty settlement. Part of the overall development is an offer to gift 172ha of the forest to Auckland Council.