The city has identified a dozen potential sites from Kailua to Wai'anae for low-income or homeless transitional housing that, if fully developed, could take in hundreds of people and help address some of Hawai'i's most pressing social problems.

Four of the locations — in Kailua, Kunia, Downtown Honolulu and Wai'anae — were found to be suitable for immediate development, according to the city Department of Budget and Fiscal Services. Eight more could be developed later.

The plan calls for the city to provide the land at little cost and partner with private businesses or nonprofits that would develop the housing.

Though the idea is still in the early stages, City Councilman Todd Apo said the council expects the city administration to put together a package of proposals to deal with the properties by the end of the year.

"My hope is that we're finding ways for the city to be involved in providing some of these housing solutions without it costing hard dollars out of the city," Apo said.

People living or doing business near the four sites say the projects are needed, but the city must be careful not to create other problems in the process.

Puna Nam, owner of Cinnamon's Restaurant in Kailua, next to that community's proposed site, said he fears losing the parking and business during construction but noted that his employees could benefit from the affordable units.

"We need rental units here, but we also need the parking space in order for businesses to continue to survive," he said.

The lack of affordable housing has become one of the state's most critical issues. High home prices and rents have put a home out of reach for thousands of Hawai'i residents and contributed to the state's homeless problem.

A legislative task force estimated in January that more than 30,000 new housing units are needed on O'ahu by 2009.

The Legislature dedicated almost $50 million to affordable housing and homeless initiatives in the last session. Meanwhile, in response to a homelessness crisis on the Leeward Coast, Gov. Linda Lingle has moved to provide emergency shelters.

Mayor Mufi Hannemann's administration has maintained that finding a solution to homelessness is a state problem, but the city is willing to contribute to housing solutions, said Cyndy Aylett, with the city's Performance Management Office.

"The mayor is committed to do what we can do on this, but housing being a state function, we're just trying to make these properties available," Aylett said.

"What we are trying to do is find opportunities where we can partner with people, private industry or nonprofit who are interested in doing some kind of affordable housing. We can provide resources: land, help with the permitting process."

Aylett said the city doesn't have the resources or people to address the problem, but with the list, the city can facilitate anyone who is interested in providing the housing or programs.

HOW SITES CHOSEN

The city was criticized for forcing an estimated 200 homeless people from Ala Moana Beach Park in March when the park began closing overnight. Meanwhile, this new initiative had just gotten under way at the request of the City Council.

To come up with the potential sites, the Department of Budget and Fiscal Services sifted through a list of dozens of surplus, vacant or underused properties in all nine council districts.

The list includes 25 properties, 13 of which were found to be unsuitable.

The list was presented to Apo's Affordable Housing & Intergovernmental Affairs Committee recently.

Essentially the city would put out a request for proposals and make the property available at little cost, said Debbie Kim Morikawa, city director of community services.

That reduces one of the biggest roadblocks to providing affordable housing — land costs, Apo said. Federal and state tax credits plus other optional financing programs would make these developments plausible, he said.

Gary Furuta, project manager for the nonprofit Hawai'i Housing Development Corp., said he doesn't think the city will have trouble finding developers.

There is a handful of developers who venture into public-private partnerships to build transitional and low-income housing.

Most of those developers are nonprofit, he said.

"You definitely need a public-private partnership because it doesn't underwrite to do affordable or even transitional housing. There isn't enough income coming in to support the amount of debt that a project would have to support," he said.

Furuta said the "biggest problem" with public-private partnerships is the financial gap that developers have to fill when building low-income housing.

"The lower you go as far as the rent and target market you're shooting for, the larger the financial gap that you have to fill in order to make a project pencil out," he said.

Low-income housing projects, such as the 107-unit Ainahau Vista senior development in Waikiki that Furuta's firm is completing, must depend on additional financial support, such as federal grants.

Laura E. Thielen, executive director of the nonprofit Affordable Housing and Homeless Alliance, said she is glad to see that the city is acknowledging the "critical problem" of affordable housing.

"It's going to be a challenge for (the developments) to be truly affordable — making sure they pencil out in regards to finances," Thielen said.

She said she hopes the city targets the units to families at or below 80 percent of the median income — or $54,250 — bracket. She also would like to see the developments be "mixed-income buildings" as to create a community of different types of people.

SNAGS IN EARLIER EFFORT

In the mid to late 1990s, the city built a senior affordable housing project over a municipal parking lot in Kailua, saving much-needed parking while providing units close to shopping, medical offices and entertainment.

But the construction closed some businesses and severely cut into the profit of others. After it was completed, people living in the complex complained about noise from surrounding businesses, drug dealing in the parking lot and car break-ins.

Nam, the Cinnamon's owner, said the city tried to solve the parking problem during construction of the senior project but the solution didn't work because the parking was at Macy's, which was about three blocks away.

"Hopefully they learned a lot and it won't happen again," he said.

Lynne Matusow, a member of the Downtown Neighborhood Board, said making the River Street property into affordable housing would improve the area. But Matusow said the city probably wouldn't get any support if the housing forces people to leave during the day, leaving many of them to just hang out on the streets.

"If it's done right with the proper management, I don't think it should be a problem," she said.

Donna Wong, a member of the Kailua Neighborhood Board, said the general public would support affordable housing or transitional housing, but any project would have to address the issues now facing Kailua at its senior housing project, Lani Huli.

"You can't solve one problem on the backs of other people and create other problems," Wong said.

Reach Eloise Aguiar at eaguiar@honoluluadvertiser.com.