About a dozen single-family homes may become part of the state's affordable housing effort under a unique but limited initiative to develop small pieces of vacant state land.

The Hawai'i Housing Finance and Development Corp. plans to seek private developers interested in building one or two single-family homes on seven mostly vacant parcels in O'ahu residential neighborhoods.

The effort is a departure from the agency's focus on creating high-density affordable housing for rent or sale, but supporters of the plan say every little bit of affordable housing helps.

"This is a very small effort, but there's definitely a need," said Betty Lou Larson, housing programs director for Catholic Charities Hawaii and an HHFDC board member.

Hawai'i is one of the nation's most expensive housing markets, and many low- and moderate-income residents are struggling with escalating rents, appreciating home prices and the trend of developers removing old apartment buildings from low-cost rental inventory for conversion to for-sale condominiums.

Last year, a legislative housing and homeless task force estimated that 44,190 new housing units will be needed by 2009 statewide — with about half that for households earning less than $54,250, which is 80 percent of the annual median income for a family of four.

The HHFDC — a state agency working to increase affordable housing development through land gifts, loans, grants, tax credits and other means — expects to help deliver about 6,000 homes over the next five years spread over more than 25 large projects.

The idea to add a few single-family homes to the mix stems from a recommendation by the legislative task force.

Task force members in a January 2006 report identified more than 50 land parcels owned by the state Department of Land and Natural Resources as potentially suitable for affordable housing. Many of the parcels were only big enough for one or two homes, but the task force viewed the effort as valuable.

"The task force urges (HHFDC) to expedite development of these small parcels for leasehold ownership housing," the report said.

Last year, Gov. Linda Lingle directed DLNR to transfer the identified lands to HHFDC for affordable housing use. But the HHFDC, after studying the properties, concluded that most sites were either unsuitable for housing or could not readily be developed because of steep slopes, inadequate infrastructure and other issues. Many sites are surrounded by industrial areas. One parcel is a parking lot for the Kalihi-Palama library. Another is a sewer pump station.

Three parcels, however, were confirmed by HHFDC as good opportunities for single-family home development. The agency later identified several other sites.

In July, the agency's board asked for the transfer of nine DLNR parcels, all but two of which are envisioned for single-family homes, and DLNR approved the request.

The seven single-family home sites are within 'Aiea, Liliha and Punchbowl neighborhoods. The two other parcels are adjacent sites in Wahiawa suited for multifamily development.

SEEKING DEVELOPERS

Chris Sadayasu, HHFDC project manager, said the agency hopes to publish a request for proposals by the end of the year seeking developers to build the homes. The homes, he said, ideally would be finished by the end of next year.

However, it remains to be seen what kind of response the state's offer receives from private developers. If no acceptable development proposals are received, the nine parcels would revert to DLNR.

Sadayasu said the agency aims to create housing for those earning no more than 140 percent of Honolulu's median annual income, or $102,000 for a family of four.

Based on federal guidelines, maximum rent would be $1,746 for a studio to $2,894 for a four-bedroom unit. A maximum sale price would be about $400,000 — well below the $648,000 median sale price of existing single-family homes sold this year on O'ahu.

However, Sadayasu said the goal is to make homes available for significantly less than the maximum allowed.

"It's up to the developers to see what they can do," he said. "We're hoping for (prices) as low as possible because the land would be potentially $1 a year lease to the developer."

If developed as for-sale housing, the homes would be available only as leasehold with the state retaining fee-simple ownership because all the parcels are ceded land.

Task force co-chairman Sen. Ron Menor, D-17th (Mililani, Waipi'o), said he's pleased that the HHFDC is following through on the recommendation to use even small parcels for affordable housing development.

"As a legislator, I've taken the position for the state to address the affordable housing needs for as broad a spectrum of people as possible," he said. "I think the project appears positive and necessary."

Affordable single-family home development by the state, however, likely will only be a niche opportunity given that most state land consists of larger parcels better suited for higher density multifamily housing.

MULTIFAMILY PROJECTS

Included in the task force's broad list of DLNR land with affordable housing development potential was a site in Kaka'ako now slated for a 196-unit rental high-rise for low- to moderate-income tenants.

HHFDC in March selected Stanford Carr Development for the $76 million project, called Halekauwila Place, on the makai-diamondhead corner of Keawe and Halekauwila streets.

Another parcel with multifamily housing potential is a roughly 2.5-acre site near Kemo'o Farm in Wahiawa that's on the current HHFDC list along with the seven single-family home sites. The Wahiawa parcel is big enough for at least 20 units.

Sadayasu said HHFDC also is in early stages of exploring large or small land parcels that might be acquired from other state agencies, such as the Department of General Services and the Department of Hawaiian Home Lands, to further affordable housing development on vacant or underutilized state property.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.