A new affordable-housing development in Kailua? To some, it seemed out of place.

Bowing to fierce objections from local residents, the Kailua-based development firm Ahe Group withdrew its application to build the Kawainui Street Apartments on the edge of Coconut Grove, next to single-family homes and across the street from an auto-parts store and a gas station. The City Council followed up on Wednesday with an 8-0 vote rejecting the project.

For affordable-housing advocates, it’s a setback. Hawaii has a severe shortage of affordable rental housing — tens of thousands more units are needed in the next 10 years. And this project aimed squarely at those who needed it most.

The 73-unit, four-story development would have provided 68 one-and two-bedroom units for Hawaii households earning no more than 60% of Honolulu’s median income. Rent formulas would have locked in for 61 years and monthly rates were estimated to start as low as $521. The project would have replaced seven single-family homes on the property.

But the neighbors and some longtime Kailua residents had a long list of objections, many tied to the similarly long list of exemptions the developer would require. The concerns: The project was too big to meet current zoning requirements. It would create horrible traffic problems. Street parking would disappear, as only 52 parking spaces would be provided instead of the required 100. It would block the neighbors’ PV solar panels and their mountain views. And so on.

Many of those objecting echoed a common refrain: “I support affordable housing, but … ”

Kailua once had a cluster of affordable rental housing — a row of aging apartment buildings across the street from Kailua District Park. But as developers, including Kaneohe Ranch, transformed the once-quiet bedroom community into an upscale tourist and daytripper attraction, the affordable rentals were torn down.

They were replaced by Ka Malanai, a luxury condominium complex built by D.R. Horton — bigger than Kawainui Street Apartments, with units priced at about $800,000.

As Makani Maeva, principal of Ahe Group, pointed out: “The fact of the matter is that Kailua is a wonderful place for those who can afford it or who are fortunate to live with family who can afford it. … Unfortunately, Kailua has changed and will continue to gentrify without taking bold action to accommodate its workforce and lower-income residents.”