On a 10-acre property in Waikiki that was once the home of Princess Ka'iulani and known as 'Ainahau, a local nonprofit group broke ground yesterday for its eighth — and largest — affordable rental housing project for seniors on O'ahu.

'Ainahau Vista will be a $20 million, nine-story project with 106 units on a lot bounded by Ala Wai Boulevard and Tusitala Street. It will be the first project in Waikiki developed by the Hawai'i Housing Development Corp. and the eighth either completed or under way in the past decade.

"Affordable housing is needed statewide and Waikiki hasn't had any new affordable housing projects built in many, many years," said project manager Gary Furuta. "This project is a well-located site for the seniors and it will be a nice place."

People 62 and older who earn at or below 50 percent of the area's median income will be eligible to apply for an apartment. Rents will range from $520 a month for a studio apartment, $600 a month for a one-bedroom and $700 a month for a two-bedroom unit.

'Ainahau Vista, previously called Tusitala Vista, will have five two-bedroom and 93 one-bedroom units, and eight studio apartments.

Amenities will include a multipurpose room with kitchen, laundry facilities, a courtyard with a barbeque area, a garden and guest parking.

There will be 29 parking stalls and a loading area with egress on Tusitala Street, and the developer is talking with the city about providing public parking stalls on the property to offset some of the parking stalls lost along the Ala Wai Canal when the city redesigned the road last year.

The project is expected to be completed in December 2006.

HCDCH is providing more than $15.5 million in federal and state low-income housing tax credits over 10 years for the project and a $2.4 million loan from the Rental Housing Trust Fund to help finance 'Ainahau Vista. In return, the housing project will remain affordable for 61 years.

Author and historian Kristin Zambucka gave a brief history of the site at the groundbreaking, and was instrumental in having the name of the project changed from Tusitala to 'Ainahau, which translates to cool land.

Zambucka said Princess Ka'iulani's home was on this site, where she died at the age of 23.

"This land was long the home of chiefs," she said. "The name change better represents the real history of the area."

Reach James Gonser at jgonser@honoluluadvertiser.com.