A 13-year-old vision to build affordable housing on public land in Chinatown took a major step forward Thursday.

A state board endorsed providing Halewai‘olu Senior Residences with $86 million in development financing.

Construction could start late next year to deliver 156 apartments in a 17-story tower for seniors with low incomes by early 2022. Projected monthly rents could be as low as $656 for one-bedroom units.

If the project proceeds as projected, it would realize a plan announced in 2006 by then-Mayor Mufi Hannemann.

The city has faced numerous hurdles, including community opposition over an early focus to house the chronically homeless on the site, as well as how a high-rise project would fit the character of Chinatown.

Under Mayor Kirk Caldwell a request for proposals was issued in 2014 for developers interested in leasing the land for 65 year at $1 a year and building homes for seniors on the site, which overlooks the Nuuanu Stream canal along River Street between Kukui Street and Vineyard Boulevard.

The city in 2015 tentatively picked The Michaels Organization, a New Jersey- based development firm, for its proposal, which included two towers up to 23 stories and 151 homes on the roughly half-acre site containing a two-story office and retail building the city bought in 1992. Michaels anticipated it could start construction in 2016.

However, progress was hampered by several issues, including how the towers would affect the adjacent Lum Sai Ho Tong society headquarters and temple, a historic building with elaborate Chinese architecture.

Michaels addressed concerns with design changes, and in 2016 obtained support from Lum Sai Ho Tong as well as a development agreement from the city.

Since then Michaels had to contend with a required State Historic Preservation Division assessment of the two-story building and ways to offset rising construction costs with further design changes that included reducing the tower’s height and density while adding a few more homes. More than a dozen meetings with Chinatown stakeholders also were held.

Early last year the developer applied for financing from the Hawaii Housing Finance and Development Corp., a state agency that helps produce affordable housing.

On Thursday HHFDC’s board unanimously supported the financing plan with an endorsement for a mix of tax-exempt bonds, tax credits and a loan.

“We’ve been working with the city since 2014, so we’re very happy that we were able to get funding approval today,” Liz Char, a Michaels development officer, said after the board’s decision. “This really sets us down the right path to move the project forward and deliver 156 affordable rental units for seniors in a very convenient location.”

Sandy Pfund, city Department of Land Management director, told the board, “This project has been long awaited by the city. It goes back two administrations in trying to decide what would be best for Chinatown and the area.”

Caldwell also sent a letter of support to HHFDC.

Under the financing arrangement, 131 apartments will be reserved for seniors earning no more than 60 percent of Honolulu’s annual median income. That equates to $49,020 for a single person and $55,980 for a couple.

Maximum monthly rents for this group would be $1,312 for one-bedroom units and $1,575 for two- bedroom units. Affordable rents must be maintained for 60 years. The project has 25 two-bedroom units to allow caregivers to live with residents.

The balance of units in the project includes eight apartments reserved for tenants earning up to 30 percent of the median income, 16 units for tenants earning up to 80 percent of the median income and one manager’s unit.