A nonprofit developer has obtained new federal and state tax credits that will help the company start construction of a delayed 192-unit affordable rental housing project at 'Ewa Villages.

The state Hawai'i Housing & Finance Development Corp. yesterday approved $30 million in credits to Hui Kauhale Inc., the local subsidiary of California-based affordable housing developer EAH Housing Inc.

The credits — $10 million of which are from the state — will help finance construction of 140 of the units in two phases expected to be completed by mid-2009.

Rental units would be reserved for tenants earning no more than 60 percent of the median income in Honolulu, or $42,780 for a family of four.

Under city guidelines, monthly rent for the two- and three-bedroom units should range from around $960 to $1,100, though rents will change as the annual median income is adjusted.

Under the tax credit program, rents must remain affordable for 55 years.

"Creating long-term affordability in our rental market is key to keeping a healthy housing market that is not subject to an ever increasing income divide," said Kevin Carney, vice president of EAH Housing Hawaii.

EAH had expected to begin construction last year on an initial 64 units after being awarded $11 million in tax credits. But permitting delays and rising construction costs led the company to give up its previous award in hopes of reapplying for more credits for more units to reduce the per-unit construction cost.

Carney said a third phase with the project's 55-unit balance hopefully will start next year if EAH is successful at obtaining more credits.

"Tax credits are the key part," he said. "But there are only so much tax credits to go around (each year)."

EAH said it expects the initial 140 units to cost about $50 million. Other financing would supplement the $30 million in tax credits, which are sold to investors and paid out over 10 years.

EAH's 'Ewa Villages project is part of an initiative the city started in 1993 to preserve the 'Ewa plantation village community after the Oahu Sugar mill closed.

But the project has suffered previous delays and downsizing. Originally, the city issued a request for proposals in 1999 to develop affordable housing on 23 acres of vacant city land off Renton Road across from 'Ewa Elementary School.

In 2001, the city selected EAH, which proposed 240 low-income rentals and bought the land in 2003 for $5.9 million, using $5 million in city-administered federal community redevelopment block grants.

Construction was expected to begin in 2006. But EAH had trouble obtaining enough financing, and ended up transferring eight acres to a for-profit developer to build 50 homes for sale at market prices.

The city accepted the change, which EAH said was suggested by the local Housing & Urban Development office. In return for the land transfer, the for-profit developer agreed to build infrastructure for the affordable rentals valued at about $5 million.

The project now involves 20 percent fewer units, or 192 units, in 14 two-story buildings plus a community center, landscaped open space and a volleyball court.

Founded in 1968, EAH is one of the oldest and largest nonprofit housing organizations in the country, and has developed about 5,200 affordable housing units.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.