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A proposal to encourage mixed-use housing in three affordable housing projects the city is trying to sell is prompting opposition from advocates for low-income residents.

The proposed sale of city properties in Chinatown that some say could dramatically alter its character and lead to “gentrification” was on the table Wednesday at the Honolulu City Council Budget Committee.

The city is seeking to sell 12 public housing projects, which could bring in some $140 million in revenue. But a recently proposed affecting three of these properties in Chinatown — Marin Tower, Harbor Village and Chinatown Gateway Plaza — is sparking opposition.

Councilwoman Carol Fukunaga has proposed changes to the pending sales bid to encourage mixed-income housing in the three high-rises, situated within a mile of one another and comprising more than 500 residential units.

By contrast, Mayor Kirk Caldwell is seeking to attract buyers interested in maintaining low-income housing. This includes households that earn 60 percent or less of the median income, a maximum of $58,740 for a family of four and $41,160 for a single person.

Fukunaga said it’s important to encourage a wider mix of incomes in the downtown neighborhood to promote economic stability and stave off “adverse impacts.”

“Existing businesses and residents, in terms of what they see, there is a lot of fear and a tremendous amount of uncertainty,” said Fukunaga in regard to the low-income policy. “Many of the businesses in the area are up in arms as they see an increasing number of homeless and anticipate the adoption of a policy that could impact their neighborhood.”

Representatives of the Caldwell administration noted that they were just following the City Council’s own 2008 directive aimed at maintaining low-income housing in the units.

And community members who have spent years fighting for affordable housing took umbrage at the idea that households earning 60 percent or below the median income comprise an undesirable population set.

Anthony Marlin, a resident of one of the 12 city-owned buildings, said that the resolution seemed to be suggesting that people earning 60 percent or below the median income “are bad people.”

“I’m not homeless. I’m not a vagrant. I don’t cause any problems. But I’m in the 60 percent category,” he testified. “So let’s stop associating people with 60 percent and below (the median income) with people who are homeless, who are vagrants, who are beggars. They are not.”

Council Budget Chair Ann Kobayashi curtly responded that this is not the contention of the resolution. “We just want a mix,” she said.

Concerns for Current Tenants

Leaders of , a nonprofit that has long advocated for affordable housing, also showed up to testify against the income requirement changes.

Drew Astolfi, the state director of FACE, stressed that people making 60 percent and below the median income tend to be blue-collar workers and people who work in Chinatown. Raising income limits could end up displacing these people, he said.

“We are worried about the gentrification of Chinatown, not the ghettoization,” he told council members.

Fukunaga told Civil Beat that her resolution, expected to receive a final vote by the City Council in early June, is not intended to displace lower-income residents or malign them.

Rather, it’s intended to protect current residents in the buildings who are making more than the 60 percent income threshold, she said.

“I’m not homeless. I’m not a vagrant. I don’t cause any problems.” — Anthony Marlin

But Ember Shinn, managing director for the Caldwell administration, testified that about 95 percent of the residents in the buildings earn 60 percent or below the median income.

Shinn also said there is a financial incentive to attracting developers interested in maintaining low-income housing — they can access federal tax credits.  Otherwise, a developer will have to seek greater amounts of private capital, potentially affecting the sale.

Last year’s attempted sale of the housing projects fell through when the developer, Honolulu Affordable Housing Partners LLC, said it had problems attracting the needed financing.

The Caldwell administration wants to put out a new request for proposals in the coming months.

Shinn said that without the low-income tax credits, developers will be tempted to resell the properties within about five years, undermining the City Council’s hope of attracting a long-term buyer who will renovate and maintain the buildings, many of which are dilapidated.

Entire Sale Could Be at Risk

A larger issue is looming, said Shinn. The City Council, days away from the deadline for finalizing the city’s 2015 fiscal year budget, has stripped out funds needed for the housing sale, she said.

The Caldwell administration had reserved $250,000 in the budget for consultation services, including an environmental assessment and real estate survey. The city already conducted the studies in anticipation of last year’s sale. But since the deal fell through, Shinn said the studies have to be redone.

“In absence of money being put back into the budget, we will not be able to move this transaction forward. And that is the harsh reality of it,” Shinn said. “If that is the wish of the council, then so be it.”

The city, widely viewed as doing a poor job of managing the properties, loses about $7 million a year on them.

Fukunaga said that the Budget Committee might need to take another look at the $250,000 funding request.