A financing plan to build a rental loft tower where local artists with low incomes can live and work is being redrawn after the project slated for state land in Kakaako encountered a $10 million cost increase due to a construction delay.

Two nonprofit developers asked a state agency that helps finance affordable housing for additional assistance to keep the 84-unit project called Ola ka ‘Ilima Artspace Lofts alive.

The agency, Hawaii Housing Finance and Development Corp., appears committed to help the developers overcome the obstacle so they can start construction in November and complete the project in May 2018.

“Low-income rentals at this level is really hard to come by,” said HHFDC board member Denise Iseri-Matsubara at a meeting of the agency’s directors Thursday.

Ola Ka ‘Ilima has been in the works for about six years and is being developed by a Minneapolis-based firm called Artspace, which builds housing for artists, in partnership with EAH Housing, an affordable-housing developer that is based in California and has a major presence in Hawaii.

The project has faced financing challenges previously, but Artspace and EAH have sustained their effort to see Ola ka ‘Ilima through.

Initially, a state agency that owns the project site, the Hawaii Community Development Authority, agreed in 2011 to exclusively negotiate a 65-year lease with the developers after they expressed interest in the site for what was previously estimated to be a $38 million project.

A bit of bad timing prevented the developers from being considered for HHFDC tax credits and loans in 2013. A year later the project was awarded a $4.5 million loan and $2.1 million in low-income housing tax credits from the agency.

The tax credits, which are partly federal and partly state, are a key piece of financing for many affordable-housing projects in Hawaii because they can be claimed annually for 10 years. That gave Ola ka ‘Ilima’s credits a face value of $21 million that was expected to yield about $16 million in proceeds after selling the credits to investors.

Ola ka ‘Ilima also had received a $1.9 million grant from the state Legislature and a $1.2 million federal grant issued by the city.

The federal grant, however, required that the developers produce an environmental study. The study, which must be completed before construction starts, prevented the developers from meeting a deadline to start construction by last summer, and the tax credits lapsed.

In the meantime, high demand for contractors and construction materials in Hawaii driven by big projects — including the city rail line, airport improvements and more than a half-dozen high-rise condominiums — have inflated construction costs.

The estimated cost for Ola ka ‘Ilima jumped 26 percent to $48 million from $38 million, and the developers revised their financing request with HHFDC.

Now the financing is proposed to include a loan increase to $7.75 million from $4.5 million, a tax credit increase to $2.9 million from $2.1 million, and the addition of $27 million in tax-exempt revenue bonds issued through HHFDC. The developers also expect $4.4 million from a city affordable-housing fund.

The revenue bonds, whose repayment would be the sole responsibility of the developers, are needed to provide more immediate funding that would be paid off partly by tax credit proceeds.

HHFDC’s board approved the loan Thursday and expressed intent to grant the tax credits and bonds, though a binding approval will be voted on at a meeting in the near future.

Greg Handberg, Artspace’s senior vice president of properties, was appreciative of the continued support.

“This is really the kickoff to move toward starting construction,” he said.

Previously, Hawaii artists have said there’s a big need for affordable artist housing, which under federal fair-housing law is not regarded as discriminatory against nonartists because the law treats artists as a special group.

Monthly rents for Ola ka ‘Ilima, which is designed with one- to three-bedroom units, are projected to range from $451 to $1,357 and will be affordable to artist households earning 30 to 60 percent of Honolulu’s median income.

The annual income limits equate to $20,150 for a single person or $40,260 for a family of four at the low end, and $28,750 for a single person or $57,480 for a family of four at the high end.

To live at Ola Ka ‘Ilima, prospective tenants will have to practice some kind of art that includes many forms such as photography, literature, architecture, singing, dancing, filmmaking and acting. Even workers such as technicians, administrators and teachers who help produce or support art can qualify.

A committee of artists, who don’t judge the quality of art from prospective tenants, helps make tenant selections.

Commercial space on the ground floor also is part of the project and will be managed by local nonprofit Pa‘i Foundation for Native Hawaiian art performances and education along with other community uses.