A state agency approved a key piece of financing Thursday for an initial phase of a low- to moderate-income rental apartment complex in Kapolei previously expected to break ground a year ago.

The board of the Hawaii Housing Finance and Development Corp., an agency facilitating affordable-housing development, voted to award Michaels Development Co. a $7.8 million loan with a 0.75 percent interest rate so it can move forward with its first of four 75-unit phases of the delayed 300-home project on state land near the Salvation Army Kroc Center.

The HHFDC’s approval followed a January vote by the board to provide the project with two other pieces of financing — $12 million in tax-free revenue bonds issued through the state, and about $1.3 million in state and federal low-income housing tax credits. The bonds are issued under the state’s bonding power but the only obligation to repay the bonds lies with Michaels.

Together, the three pieces of financing will completely pay for the $21 million first phase of construction expected to begin in November and finish in June 2018.

Apartment rents are projected to be as low as $392 a month, and serve residents earning as little as 30 percent of the median income for Honolulu.

The project, which has not been named yet by Michaels, is part of a state master plan known as East Kapolei II, covering 400 acres.

East Kapolei II is largely undeveloped but is envisioned for 2,300 homes, including many developed by the Department of Hawaiian Home Lands, along with an elementary school and a middle school between the Ewa Villages Golf Course and the Ho‘opili community planned for 11,750 homes.

The HHFDC issued a request in June 2013 seeking proposals from private developers interested in producing affordable housing on 20 acres within East Kapolei II. New Jersey-based Michaels outscored three other bidders — the Hawaii Housing Development Corp., Hunt Development Group LLC and Hui Kauhale Inc. — and was selected by the agency in December 2013. The winning developer at the time said it anticipated construction could start by early 2015.

The plan by Michaels calls for one- to three-bedroom apartments in two- and three-story buildings serving residents earning no more than the median income in Honolulu.

Of the initial 75 units, 45 one-bedroom apartments are projected to rent for between $392 and $931 a month depending on a tenant’s income. And 30 two-bedroom units would rent for $1,115 a month.

Eligible tenants in the first phase may earn no more than 60 percent of the median income in Honolulu, which equates to $28,680 for a single person and $40,920 for a family of four. Eight units are reserved for tenants earning no more than 30 percent of the median income, which would be $14,340 for a single person and $20,460 for a family of four.

A community hall for social services including a computer center and recreational activities also will be developed in the first phase.

Michaels has a 65-year lease for the land and will manage the property through an affiliate. The company expects that it will market units and solicit rental applications about six months before construction is completed.

Some of the delay in starting construction was due to the time it took the HHFDC and Michaels to sign a development agreement. That happened in December 2014.

Obtaining financing also took longer than anticipated. Michaels sought tax credit and bond financing from the HHFDC last year, but withdrew its application because two other projects it is developing on Hawaii island, known as Kamakana Villages and Kamakana Senior, received tax credits. Monika Mordasini Rossen, development vice president for Michaels in Hawaii, said the company didn’t want to edge out other affordable-housing developers competing for tax credits from the HHFDC.

“There are only so much tax credits available,” she said.

Michaels has been an active player in Hawaii affordable-housing development in recent years. The company renovated the state’s largest public housing project, the Towers at Kuhio Park in Kalihi, formerly known as Kuhio Park Terrace.