In a pitch to lawmakers yesterday that seemed almost too good to be true, developers outlined a rehabilitation proposal for dilapidated public housing projects that requires little to no state funding while preserving all or most of the affordability of units.

The proposal, which has worked in other states and largely relies on tax credits and private financing, drew strong support from lawmakers and state public housing officials, who have long been grappling with how to tackle a deteriorating, aging inventory in tight fiscal times.

"This is something that can be done now," state Sen. Suzanne Chun Oakland, the Human Services and Public Housing Committee chairwoman, said yesterday at the joint legislative hearing, which centered on the bleak state of public housing in the Islands and how it can be improved.

State Rep. Gene Ward, of the House Human Services and Housing Committee, was similarly intrigued with the prospects of the rehabilitation proposal — with its palatable pricetag for the state.

"It seems to hold a lot of promise," Ward told the developers.

The proposal, one of several the Hawai'i Public Housing Authority is eying, includes using federal tax credits, bonds and private investment to either revamp or rebuild projects and potentially add near-market or market rental units on public housing properties, or even retail components.

The developers said as part of the rehabilitation work, the distressed public housing buildings could be sold under strict guidelines to preserve their affordability, and then can be sold back to the state or a nonprofit entity after a set number of years, usually between 15 to 30.

Selling the units could make economic sense and allow investors to leverage other funding sources, but the investors would eventually want to let the projects go once tax credits expire or to recoup their initial investment.

Similar proposals that have proven successful do not involve selling units, but use the same financing schemes.

"We're talking about public-private partnerships to solve the problems in public housing," Douglas Bigley, president of Urban Housing Communities, told lawmakers yesterday. The for-profit, affordable housing developer has worked on several similar projects in California.

ONGOING EFFORTS

The discussion comes as the Hawai'i Public Housing Authority is in the midst of a massive "turnaround plan" to tackle a longstanding deficit, more than 500 vacant units in need of repairs, chronic rent delinquency and scores of urgent maintenance needs. HPHA Executive Director Chad Taniguchi has said his plan can only do so much to help the state's 83 public housing developments, which are facing some $320 million in backlogged repairs.

And he told lawmakers yesterday the alternative to a radical new approach to rehabilitating public housing — potentially in the form of mixed-income redevelopment like what was discussed yesterday — could be selling off housing projects in the worst shape or tearing them down.

He said federal operating subsidies and other appropriations have not met the longstanding maintenance needs at public housing. As a consequence, repairs continue to back up.

"When you're short like that, things have to give," he said at the hearing, adding that he has been discussing mixed-income proposals at meetings with residents and has received positive responses.

"In general, people have been very supportive of the concept," he said.

Taniguchi and members of the HPHA board are studying the mixed-income proposal, and the authority plans to hire a consultant to see which projects would be good candidates for that type of rehabilitation. Officials have stressed, though, that the process of redeveloping the statewide inventory of housing projects is a lengthy one, conceivably lasting 20 years or more.

The developers yesterday said the first step in making the process a reality is issuing a request for proposals, which would outline how the authority wants to redevelop a project and the mandates under which a developer would have to work — for example, retaining affordability.

It's unclear how long it would take for the state to issue a request for proposals, but officials did say the redevelopment push is a priority project that they hope to address at length in the coming legislative session.

Wayne Hykan, of the Colorado law firm Ballard Spahr Andrews & Ingersoll, a nationally recognized leader in housing law and financing, said though the state wouldn't be spending money if it were to proceed with the proposal presented yesterday, lawmakers, HPHA and other agencies would be needed to secure tax credits and bonds and coordinate governmental regulations.

He said the state would also have to craft a rehabilitation proposal that would make the most economic sense for each project. For example, will the rehabilitation involve tearing down units or revamping them? Will it involve adding new market-rental units or putting in retail space?

"There are trade-offs involved in all of these mixes," he said.

"It's a complex calculation and it requires a team effort to figure out what the best mix is."

OTHER HOUSING ISSUES

Though lawmakers had plenty to talk about with the rehabilitation proposal, the meeting yesterday was not only about redevelopment. Legislators also wanted to hear Taniguchi's progress in addressing longstanding concerns in public housing, including vacant unit turnaround.

At one point, state Sen. Donna Mercado Kim expressed frustration over the failure of the authority to reach its goal of turning a unit around in two days and asked Taniguchi why it took so long for housing officials to realize that the authority should have a pool of applicants ready for whenever a unit is vacated. That pool started in February.

"It's common sense," she said.

Currently, Taniguchi said, it takes about a month on average for a vacant unit to be filled.

That's down from 69 days in the past, but far from the two-day goal.

Taniguchi had the floor for about half of the two-hour meeting to talk about the improvements he's making and to address concerns. Even with an hour to talk, Taniguchi wasn't able to touch on concerns about security in public housing projects and Chun Oakland said she would like to hold another hearing to address questions about how management contracts for projects are awarded.