A state-run technology business incubator in Manoa is headed for expansion in Kakaako after a state board approved on Wednesday a development agreement for the $7.3 million project.

Construction of the two-story “collaboration center” with 13,500 square feet of work area is projected to start next month and open about 10 months later on what is now a parking lot immediately Ewa of the University of Hawaii medical school.

The facility being dubbed the Entrepreneur’s Sandbox will be operated by the Hawaii Technology Development Corp., a state agency that runs Manoa Innovation Center, a similar facility that is fully occupied.

The Sandbox is being developed under a partnership that includes HTDC, another state agency that owns the Kakaako site and private developer Stanford Carr, with money from the state Legislature, the Federal Economic Development Agency and Carr.

HTDC had been under pressure to start work because the federal agency’s $3 million contribution requires construction to begin by May and finish by September 2019.

The project has been in the works for several years. In 2014, HTDC arranged to work with a sister agency that owns the Kakaako site, the Hawaii Community Development Authority, to help advance planning and development of the Sandbox after the Legislature provided $3 million.

HCDA issued a request for development proposals in 2015, and in 2016 preliminarily selected the only respondent, Carr, subject to finalizing development agreement terms.

Initially, local office and school products retailer Fisher Hawaii committed to contribute $1.3 million for the Sandbox in return for space in a future phase of what is envisioned to become a tech campus, but Fisher pulled out after a disagreement on what kind of space it would receive. Carr said he will provide the lost piece of financing as a community contribution, though he will try to recover the sum in a $72 million second phase if he moves forward with that.

On Wednesday, HCDA’s board approved the development agreement for the Sandbox, which Carr will dev­­elop for HTDC on land leased from HCDA at $1 a year.

The second phase calls for a seven-story office building for tech businesses. Carr has two years to assess the feasibility of that project and another three years to build it — otherwise a development agreement would terminate. Other phases of the campus are envisioned to include 140,000 square feet of education space, 47,000 square feet of incubator space and a 900-stall parking garage on the 5.5-acre site.