For the last six years there have been some nearly finished two-story town-home buildings overlooking distant ocean views on Hawaii island, but completing and selling them has been an ordeal that recently became more challenging.

The roughly 40 town homes are part of a project called Villages of Aina Lea led by a developer that expected to cinch a business merger that would have helped finance completion of a stalled initial phase that includes the long-empty homes.

Instead, a lender is trying to foreclose on part of the more than $1 billion planned residential community.

A Chinese investor filed the foreclosure lawsuit in January against Aina Lea Inc., which has four loans in default and needs more capital to complete its initial phase of housing.

The lawsuit was cited recently by another company as a reason it called off a merger that would have provided Aina Lea with money to pay off debt and advance the project, which has been mired in difficulties for three decades.

Bob Wessels, Aina Lea’s CEO, disputes that the foreclosure was an issue in the failed merger, and said he expects to resolve the financial difficulties soon and deliver the first homes in about six months at the master-­planned community slated for 2,300 homes, a golf course, a lodge and a shopping center on 1,099 acres in South Kohala mauka of Mauna Lani Resort.

“We will get it resolved here shortly,” he said.

Libo Zhang, a Chinese national, filed the lawsuit after Aina Lea failed to repay a $6 million loan that matured in November and is secured by part of a 61-acre first phase that is to include 384 affordable town homes called Lulana Gardens, 48 luxury condominiums and 70 single-family house lots. So far, much infrastructure work has been done, but only 40 of the town homes are under construction and close to completion.

The developer also plans 1,807 lots for luxury homes on another 1,011 acres.

Zhang’s loan is secured by 23 acres slated for the 70 home lots, according to Wessels. “It’s something we need to address, but it’s not tied to the town houses,” he said.

Besides Zhang’s loan, three other Aina Lea loans are in default, according to a recent financial report filed by the development firm, which is incorporated in Delaware and based in Hawaii. The three others are a $490,000 loan from American Savings Bank, a $12 million construction loan from a Canadian lender and $14 million owed to a company that previously owned the development site.

This is the second time the project has been in foreclosure, and presents another challenge for the developer, which said it has spent $116 million to date and raised money from more than 1,000 foreign investors who were given ownership stakes in the land.

Villages of Aina Lea started off as a residential community planned by California development firm ­Signal Puako Corp., which envisioned building 2,760 homes along with a golf course and retail center. In 1989 the company received state approval to convert the land from agricultural to urban use.

In 1991 Japanese developer Nansay Hawaii Inc. acquired the project and recast it for six golf courses and 1,550 homes before faltering amid Hawaii’s flagging economy in the early 1990s and losing the property through foreclosure in 1998.

Bridge Aina Lea, an affiliate of U.S. Virgin Islands-­based real estate and lending company Bridge Capital, bought the project site in 1999 and worked to amend the development plan along with an affordable-housing condition.

The state required that 60 percent of all homes be affordable to moderate-income buyers. But Bridge Capital said that wasn’t achievable for its 2,300-home plan, and was able to obtain a revised 20 percent requirement from the state Land Use Commission in 2005, which meant building 385 affordable homes instead of 1,300.

As part of the new agreement, the LUC imposed a five-year deadline to deliver the affordable homes, which Bridge Capital said would be priced around $200,000 and help satisfy heavy demand for workforce housing.

Bridge Capital expected to finish in three years but encountered permitting delays, including a new requirement in late 2007 to produce an environmental impact statement in the wake of a legal ruling tied to the Hawaii Superferry. Then a global financial crisis hung up financing.

Wessels and his firm previously known as DW Aina Lea Development LLC joined Bridge Capital in 2007 to help deliver the affordable homes, and two years later bought the 61-acre first phase of the project. But the deadline wasn’t met, and the LUC rescinded its land-use approval in 2011.

At the time, Wessels claimed that $25 million had been spent on development, largely on infrastructure. Also, about 32 town homes were substantially complete, though they lacked roads or utilities.

Litigation ensued, and the Hawaii Supreme Court ruled in 2014 that the LUC was wrong to rescind its approval.

Bridge Capital had sought $15 million in damages but negotiated a $1 million settlement with the state after the court ruling.

Wessels said the LUC decision stalled construction and inhibited the company’s ability to raise financing. Aina Lea has lodged a more than $200 million damage claim with the state that is outstanding.

In the last two years, Aina Lea raised new financing and announced a new timetable for home sales.

The developer said in 2015 that it planned to sell over $3 billion of homes over eight to 10 years working with luxury homebuilders, and that in 2016 it would begin completing the first sales of its affordable Lulana Gardens town homes priced from $375,000 to $409,000.

Much of the company’s early financing — $44 million — was obtained by selling stakes in the land to more than 1,000 investors from Singapore, Malaysia, Hong Kong, Japan, Australia and Indonesia.

To finance more recent work, Aina Lea raised $16 million selling stock in itself to Shanghai Zhongyou Real Estate Group in late 2014. In 2015 the company obtained a $12 million construction loan from Canadian lender Romspend Investment Corp. and the $6 million loan from Zhang. The developer also obtained a $1 million loan from Whales Point Fund LLP and bought the 1,011-acre balance of the development site from Bridge Capital in a $24 million deal that included a $10 million payment and a $14 million loan from the seller.

Some of these loans, however, are now in default.

The developer missed an interest payment on the Bridge Capital loan in July, was relieved of paying interest through March 15 but owes Bridge Capital about $1 million in interest and penalties on the loan that matures in November 2018. Romspend issued a notice of default on its loan in February.

To alleviate financial difficulties, Aina Lea arranged in December to merge with a company called Origo Acquisition Corp., a firm formed in the Cayman Islands in 2014 as a “blank check” company with public stock and $42 million to invest in other businesses. But last month Origo terminated the merger agreement, citing the foreclosure lawsuit. Wessels said foreclosure was not an issue and that Origo couldn’t obtain shareholder approval for the merger.

Wessels said he needs about $20 million to finish phase one and refinance debt. Also, the company has a requirement to produce a supplemental environmental impact statement, which Wessels expects to complete in about six months and should allow completion and sale of the initial town homes.