O'ahu's growing shortage of housing that's affordable to low- and middle-income residents is shaping up as a hot issue at Honolulu Hale as money piles up in a new housing fund and politicians position themselves for next year's elections.

The city operates 12 subsidized housing complexes with nearly 1,300 apartments, but has long been moving toward selling or leasing the properties to private landlords who may be able to operate them more efficiently while maintaining below-market rents.

But some City Council members want to retain the apartments and use the voter-approved housing fund to help cover operating and maintenance costs.

Councilman Romy Cachola said there are too many unanswered questions about whether low-income tenants would otherwise be displaced.

It does not appear that the city could legally require a new owner to offer below-market rents in perpetuity, he said.

"It's a good plan to keep solid assets, and we don't want people to think we are running away from people in need by selling housing," Cachola said.

Meanwhile, council members Ann Kobayashi and Donovan Dela Cruz have drafted a legislation package that includes various incentives for private developers to build more affordable housing.

"It doesn't seem like the city administration is moving," said Kobayashi, who has been mentioned in political circles as a possible challenger to Mayor Mufi Hannemann's bid for re-election next year. "The city should do its share in helping to solve the homeless problem."

Kobayashi said she had been urged by supporters to run against Hannemann and had not ruled it out, but that her initial plan is to seek re-election to the council.

Dela Cruz, a close Kobayashi ally, said he hopes the housing proposals will spark a debate that leads to solutions.

"Some of the ideas may be controversial, but we have to get them out on the table," he said. "We have to get the ball rolling. We have a real homeless problem, with a lot of people living out of their cars and on the beach. This subject needs leadership, and we're trying to provide that by proposing this legislation."

Hannemann said his administration has moved cautiously while trying to ensure that any housing sold or leased will remain affordable. It is clear that any new housing should not be city-managed, he said.

"We don't have the money or management capabilities to continue to operate, maintain and upgrade our existing housing portfolio," he said.

NO 'NEW BUREAUCRACY'

Hannemann noted that the city's housing department was shut down after the 'Ewa Villages scandal, in which a former city housing official was convicted of 43 charges for his lead role in the theft of nearly $6 million in the late 1990s.

"We're not going to be creating a whole new bureaucracy again, or even take on a semblance of a housing department," Hannemann said.

The new housing fund is expected to accumulate about $7 million per year, and has gathered nearly $4 million so far, Kobayashi said. It was created after voters approved a 1996 City Charter amendment that earmarks one-half of 1 percent of annual property tax revenue for affordable housing.

Hannemann said Kobayashi and Dela Cruz had not apprised him of their proposals for using the fund. Spending some money to improve the safety and maintenance of city housing could be a good option, he said. But helping to develop any new housing would require the expertise of a housing specialist the city has yet to hire, he said.

"Before we start embarking on all these new initiatives, I need to make sure we can do it right," Hannemann said, adding that salary constraints have made it hard to recruit a top housing specialist.

Dela Cruz said he did not necessarily believe the city should retain all its rental apartments, as a measure sponsored by Cachola would require.

"If someone else can maintain and manage these properties better than the city, and keep them affordable, then that's something we have to consider," Dela Cruz said.

PROPOSAL'S DETAILS

The package introduced by Kobayashi and Dela Cruz would: