The city has reached a development agreement with a private company to put up a minimum of 151 senior rental units in two midrise towers along River Street near Vineyard Boulevard, the Caldwell administration announced Monday.

All 151 units at Halewai‘olu Senior Residences would be required to be rented to those 62 years and older and with annual income not exceeding 80 percent of Oahu’s area median income, or $53,700 for a single person in 2015. A majority will be one-bedroom units aimed at those making 60 percent of AMI, or $40,260 for a single person.

The development agreement must still be approved by the Honolulu City Council.

Mayor Kirk Caldwell, in a release, said the project will “provide greatly needed affordable senior rentals in a manner consistent with the desires of the neighboring community and our values as an island.”

Negotiations with the Michaels Development Co. began in May for the city-owned property behind Borthwick Mortuary and mauka of the Lum Sai Ho Tong building. The property now is home to a two-story commercial office building.

Michaels will pay a nominal lease of $1,614 annually during the first 30 years in exchange for agreeing to keep the units in the affordable categories. After that, lease rent will increase by 30 percent, and then an additional 10 percent every 10 years thereafter. The entire lease is for 65 years, with an option for 10 more years.

Michaels, headquartered in New Jersey, describes itself as “among the leading private-sector affordable housing owners and developers in the nation.”

To make the $49 million project pencil out, Michaels is relying on significant subsidies or low-income loans including the federal Low Income Housing Tax Credit Equity and state Rental Housing Trust Fund programs as part of its financial package.

The project will feature an elevator core that services both towers, a parking garage, a recreational deck, retail space and a street-level community center that had been requested by Chinatown leaders.

Wesley Fong, Chinatown Community Center Association president, said Monday his group was pleased that Michaels incorporated some of the concerns his group’s members had voiced.

However, he said, the association and other Chinatown groups were disappointed that they had not been consulted before the plan was unveiled at a Downtown Neighborhood Board meeting Thursday.

“We’re supposed to be working together,” Fong said. “Don’t just spring this on the neighborhood board and say, ‘Here it is.’ We’re not against the project, but we’re not totally for it yet.”

Howard Lum, Lum Sai Ho Tong president, said his group is still worried about how the new development will affect the group’s property.

A city spokesman said that as a concession to the Lum organization, the site plan has now incorporated a 10-foot setback, with trees and other green space between the Lum building and the closer tower.

Former Mayor Mufi Hannemann’s administration drew the ire of the community in 2006 when it proposed that the site be used for a project to help the homeless. That project was eventually nixed.