Privatizing doesn’t have to be a dirty word when it comes to affordable housing that’s now government-owned. Palolo Homes, a 306-unit complex that has flourished under private nonprofit management since 2002, has been held up for years as an example of how moving a project out of the public-housing stock can succeed.

That experience, in which tenants helped to envision their own neighborhood programs, suggests how the city should approach its planned sale of affordable housing properties: involvement of the people the most vested in its success. On Tuesday a group of city tenants voiced their concern about being consulted in the process, gathering near one of the Chinatown developments.

Fortunately, the Carlisle administration seems to be headed in the right direction with the conversion, with officials preparing a request for proposals to buy the properties in leasehold, retaining ownership of the land. In this way, terms that could ensure the affordability of the units into the future could be built into the lease. Housing advocates rightly argue that the residents should have a voice in how those terms are set and be kept in the loop throughout the process, so that they will know what to expect well in advance of any changes.

The city’s housing inventory comprises 1,257 units in 12 apartment projects. That’s a significant resource in a city where affordable rentals are in such short supply, and the economic turmoil of the recession has made that shortage even more critical.

But it’s clear that the city’s continued management of the properties is unsustainable. Officials estimate the annual losses from the enterprise at $3 million — money can’t be squeezed from the budget in these dire times. A private owner-manager is motivated to run a tight ship because losses come off its own bottom line; the private sector has a better track record screening tenants, keeping up with maintenance, keeping in the tenants who pay their rent reliably and moving out the ones who don’t.

Advocate organizations like Faith Action for Community Equity say nonprofits for which affordable housing is part of the mission are ideal. They would not be the only suitable buyers, but the Palolo Homes owners, Mutual Housing Association of Hawaii, exemplify that idea. The nonprofit organization acquired Palolo Homes from the state in March 2002, and then completed a $13.5 million renovation of the complex in 2004. Its managers have said that the company’s emphasis on tenant-initiated programs, such as a computer-training center and tutoring programs, have bolstered resident pride and commitment.

It’s been more than a decade since the scandal-ridden Ewa Villages development pressed Honolulu officials to dismantle the municipal housing agency, but it shouldn’t sour the city altogether from being a partner in the housing mission.

In his first State of the City address, Mayor Peter Carlisle pledged to "offer the 12 affordable housing properties to qualified parties who would continue to operate those properties under existing terms of affordability." That is the right promise, and the families who need this housing most should be involved in its fulfillment.