A $136 million affordable rental housing project is underway in Kapolei after a delay of almost three years.

New Jersey-based The Michaels Organization held a groundbreaking ceremony Monday for Keahumoa Place, which features 320 apartments on 20 acres of state land.

The first homes, which offer rents as low as $587 a month for households with very low incomes, are expected to be finished late next year. The final homes are projected to be finished by the end of 2020. The community will be made up of 37 two-story buildings.

“With our ceremony today, The Michaels Organization embarks on the construction of a residential community which we hope will fuel the dreams of many families in the Kapolei-Ewa Beach neighborhood,” said Elizabeth Char, a company vice president in Hawaii.

A state agency, the Hawaii Housing Finance and Development Corp., is financing the bulk of the project through bonds, loans from a rental housing fund and tax credits. It also provided the land to Michaels under a 65-year lease that requires affordable rents be maintained throughout the lease term.

Monthly rents at Keahumoa Place are expected to range from $587 to $2,907.

The low figure covers one-bedroom apartments for households earning no more than 30 percent of Honolulu’s median income, which equates to $24,510 for a single person or $27,990 for a couple. The high figure is for a three-bedroom apartment for a household earning the median income, which equates to $81,700 for a single person, $93,300 for a couple and $116,600 for a family of four.

At least 256 units, or 80 percent of the project, will be reserved for households earning no more than 80 percent of the median income, which equates to $65,360 for a single person, $74,640 for a couple and $93,280 for a family of four.

The project site is part of 400 acres of state-owned land on which 2,300 homes are envisioned under a master plan known as East Kapolei II. Other projects in the master plan include Ka­polei Middle School, an elementary school, state Department of Hawaiian Home Lands property and the low-income rental complex Ko‘oloa‘ula.

HHFDC offered the Keahumoa Place site — which is a mile from the city’s first rail station and adjacent to the beginnings of the master-planned 11,750-home Ho‘opili community — to developers through a request for proposals in 2013.

Michaels outscored three competitors: the nonprofit Hawaii Housing Development Corp., Hunt Development Group LLC and an affiliate of nonprofit EAH Housing.

Initial projections called for construction in late 2014 or early 2015, but that timetable was delayed in part because of limited available tax credits and the extra time it took to negotiate a development agreement.

Keahumoa Place is the third Hawaii project by Michaels, which was founded 45 years ago and operates in 36 states. The other Hawaii projects by the company are the Towers at Kuhio Park renovation in Kalihi and construction of affordable Kamakana Villages and Kamakana Senior homes on Hawaii island.

Kenneth Crawford, chief operating officer for Michaels, said his company has had a great partnership with HHFDC.

Gov. David Ige, Mayor Kirk Caldwell and other state and city leaders congratulated Michaels and said collaborations between the public and private sectors are key to getting affordable housing built for low-income residents on Oahu, where the median price for a condominium is $425,000 and the median price for a single-family home is about $780,000.

For more detailed information about leasing at Keauhumoa, email keahumoa@tmo.com.