Project supporters wore blue t-shirts to counter opponents dressed in red.
There were last-ditch appeals from professionals and young families to build homes within their reach.
MJ Development proposed building close to 200 workforce units.
Under HDCA rules, a family of four making between $86,000 and $120,000 a year could qualify to buy them.
The workforce definition is a middle-class between luxury and affordable units.
"Whatever the decision, we will accept it, but we will be back," said developer Franco Mola.
Opponents outnumbered supporters three-to-one.
They complained about blocked views and buildings packed too tightly together.
HCDA staff sided with them, giving the thumbs down on the height and setback exemptions Mola asked for.
It determined that allowing him to exceed the 65-foot height limit by going up to 250 feet would not enhance the area, nor advance the authority's goals.
"Our recommendation is to deny the applicant permission for the development permit," said HCDA executive director Anthony Ching.
The board agreed.
Opponents who maintained the proposed project was too big for the space, hailed the board's decision.
They had feared that the project was a done-deal.
"We were listened to. Here we are the day before the Fourth of July and the process worked. That is very gratifying," said Pam Wood.
“This would not have been a good project to start this area off with so I think the right decision was made today," said Rep. Scott Saiki.
The developer has until July 15th to decide whether he will appeal the board decision.