The city will close the sale of its 12 affordable housing complexes to a private entity for $142 million by a scheduled March 31 deadline, Community Services Director Pam Witty-Oakland told the City Council Budget Committee on Wednesday.

Honolulu Affordable Housing Partners LLC received an OK for its financing plan from the Hawaii Housing Finance and Development Corp. earlier this month, paving the way for the company to obtain tax-exempt bonds and low-income tax credits from the state agency.

The group is now working with its commercial lenders and hopes to approach the city with a final package by the end of the year, Witty-Oakland said. The March closing date is what’s listed in the Honolulu Affordable Housing Preservation Initiative original purchase agreement, she said.

The agreement, negotiated under former Mayor Peter Carlisle, gives the city $142 million that will be used largely to pay off the loans used to buy the properties. Additionally, the housing group is promising to make approximately $40 million in improvements.

The Council earlier this year also agreed to an administrative plan to set aside $5 million from the proceeds to increase the maximum monthly subsidy now issued to low-income families. The existing maximum is $170 a month.

The plan gives Honolulu Affordable Housing Partners a 65-year lease in exchange for promising to keep most of the 1,257 units in the federally defined affordable category. The city maintains ownership of the land under the properties.

Some area leaders have voiced concerns that those residents who do not meet low-income thresholds may be forced out of their homes.

Chuck Wathen, who led one of four groups that lost the bid to take over the units, reiterated his previous concerns for families that make more than eligibility requirements but cannot afford market rents.

Wathen said the city has not yet publicly identified those who may potentially be dislocated as a result of the sale.

"You’re wiping out 719 workforce housing units that cannot be duplicated," Wathen said. "There is not enough money to do it."

Council Budget Chairwoman Ann Kobayashi said some existing tenants "still do not feel secure about whether they will still be able to remain in their homes."

Witty-Oakland said city staff will be working with the new owners and tenants between now and the end of the year.

The intent of the city is to avoid displacing anyone, but federal guidelines may force some out, Witty-Oakland said.

"Our goal is to preserve the housing for those who are there now, but we have to do it within the (regulations)."

The properties have been and will continue to be designated "mixed-income properties." Most tenants who exceed low-income thresholds will be allowed to stay provided they pay market rates. Meanwhile, there are programs available to assist those who don’t make enough to qualify for affordable units, she said.