More than a decade after the city built its last affordable housing project, Mayor Mufi Hannemann says he wants to sell all 12 of the city's rental properties for low-income residents, citing high maintenance and management costs.

In a news conference yesterday, Hannemann stressed that the properties would remain affordable, with deed restrictions passed on if the properties are resold. He also said the buildings would be put on the market in phases, starting with the 160-unit Kulana Nani apartment complex in Kane'ohe.

There is no timetable for the sales.

"I'm asking the residents to keep an open mind," Hannemann said. "I really want to take the residents to a better place."

Many tenants living in affordable units said they weren't surprised at the announcement, but were disappointed the city didn't go to them first with the news.

"They should let us know what is happening," said Connie Gaesler, who lives at Winston Hale on River Street. The city did inform the resident manager at Kulana Nani of the sale, but residents were not uniformly notified.

Lorraine Soriano, who has lived at Kulana Nani for 28 years, said she doesn't believe the mayor can guarantee the complex will remain affordable.

"It's good that the city is getting out because they don't know what they're doing here," Soriano added, pointing to maintenance concerns at the complex.

She said several units have serious termite damage and corroded pipes.

Many tenants also said they wanted the city to clearly define just how affordable the units would remain, and how much input residents would have on prospective buyers.

"The question here is selling to whom and under what conditions," said Steve Lohse, a resident at Chinatown Gateway Plaza. "The city is making decisions that profoundly impact our lives.

"These are our homes. These are not properties. How they define affordable becomes critical."

HALF IN CHINATOWN

The 12 city-owned properties consist of 1,257 one-, two-, three- and four-bedroom apartment units. Half of the properties are in Chinatown.

Marin Tower, the newest and largest city complex, was built in 1994. The oldest — the Bachelors Quarters in 'Ewa — was built in 1938.

Cyndy Aylett, who reviewed the properties for the city, said construction costs for all 12 projects totalled about $172 million. The city did not release market values for the properties, saying they were too preliminary to determine.

Annually, the city spends about $3.5 million more on maintenance and operating costs at the properties than it takes in from rent and other sources.

The mayor also said the maintenance concerns — from leaky pipes to crumbling sidewalks — are growing worse as the complexes age, but he didn't rule out more spending on the properties if it would make them more appealing to buyers. Six of the complexes were built in the early 1990s and they already are facing big maintenance issues, Hannemann said.

The other complexes are from 34 to 69 years old.

"We've been struggling," Hannemann said. "They (tenants) are not going to be satisfied if the city continues as we have in the past. We don't have the money to do it right."

SHIFT IN POLICY

Housing advocates in Hawai'i and on the Mainland said the sale of the properties signals a dramatic shift in the city's housing policy, which has gone from building and managing affordable properties to facilitating the construction of apartments with developers. The sale comes as other cities and states also are selling off properties, and not always keeping them affordable.

"More and more it's nonprofits that are actually maintaining and building affordable units," said Chanu Lee, a San Francisco-based housing consultant who is helping in the fight to keep Kukui Gardens affordable. "I think nonprofits probably do do a better job. That's what they're in the business of doing."

Kukui Gardens, which is owned by a nonprofit, was nearly sold to a for-profit last year. Under a compromise reached in January, the project will be split — half of it to be purchased by a nonprofit to preserve its affordability, the other half to be turned into mixed-used residential, retail and office complex.

Drew Astolfi, lead organizer for Faith Action for Community Equity in Hawai'i, helped broker the Kukui Gardens deal. He said there probably are several Mainland nonprofits interested in buying the city's properties.

He pointed out there are not many nonprofits in the Islands with the capital and personnel to purchase the apartments.

"This is a unique opportunity for the city to foster the development of the nonprofit development sector in Hawai'i," Astolfi said. "Permanent affordability is an absolute necessity."

NONPROFIT OWNERSHIP

City Councilman Rod Tam, who heads up the newly formed affordable housing committee, said he wants to work with residents to hear their concerns and needs. He also said he would like to see all of the properties sold to nonprofits, which would mean more money could go into backlogged repairs.

Tam said Kulana Nani could be in the hands of a new owner by the end of the year, but pointed out it will be a difficult sale. The apartment building sits on land owned by Kamehameha Schools, which is in discussions with the city.

The land was put on the market last year at about $6.8 million, but was not sold. The city's lease for the land runs out in 2048, Aylett said.

The mayor said he wants to arrange a deal with Kamehameha Schools on the land before putting the apartment complex up for sale. He also said no other complex would be put on the market until Kulana Nani is sold.

The apartment complex, centered on Kahuhipa Street, likely will be difficult to sell because it is made up entirely of low-income tenants who pay the lowest possible rents under federal guidelines.

Dorothea Pale, a long-time Kulana Nani resident, said she fears people will be unable to afford any rent increase after a sale.

"I cannot believe with all the housing problems they got in Hawai'i that they're doing this," she said. "I feel they're just trying to honey us up. They want to appease us for a little while and they are going do what they want to do."

Reach Mary Vorsino at mvorsino@honoluluadvertiser.com.