The Honolulu City Council seems unwilling or unable to come to terms with the reality, and the urgency, of Honolulu’s low-income housing needs.

After the failure of the previous deal to privatize the city’s 12 affordable-housing rental complexes, the city administration has forged an alternative proposal to make the deal more palatable to potential bidders.

So far, Council members have made little progress in this direction.

The administration of Mayor Kirk Caldwell has proposed to divide the properties into two groups, with Kanoa Apartments in Palama, Bachelors Quarters in Ewa and Pauahi Hale in Chinatown — the three most unsustainable projects — sectioned off into a separate category.

The remaining nine would be put up for sale as a block, and if that were to succeed, the city would be able to start saving much of the roughly $7 million it loses each year by operating them itself. Even if the city couldn’t find a buyer for the other three in the near future and must continue operating them for a time, curtailing the losses would represent a fiscal improvement for the city.

Unfortunately, such improvement has been stalled because of a dispute over how to adjust the mix of income groups that can access units in three of the nine projects that would go on the sales block: Marin Tower, Harbor Village and Chinatown Gateway Plaza.

City Councilwoman Carol Fukunaga proposed changing a standing policy that incentivized renting to those earning 60 percent of area median income, or less.

Instead, Fukunaga proposed that any increase in the accommodation of this poorest population be allowed only if the units to be converted to 60 percent income are not located within a mile of each other. The idea is to broaden the range of income groups that the resolution asserts is "proven to be economically and socially beneficial for project neighborhoods."

This is a reasonable approach, one that drew support from state lawmakers representing the same Chinatown district that Fukunaga serves. For example, state Rep. Karl Rhoads said this would "avoid the creation of a ghetto-like situation in Chinatown.

"Of course we need more housing for those who make less than 60 percent of area median income, but we also need housing for those farther up the income ladder who cannot afford market rates either," Rhoads said in written testimony.

Inexplicably, Fukunaga issued another draft to drastically curtail the service to the 60 percenters by enforcing the distribution of rentals that was in place when the three projects were built. Several critics have rightly pointed out that there were no set-asides in the lowest group at that time, which effectively would displace 309 current renters.

That proposal was deferred on Wednesday and needs to be permanently spiked at the earliest opportunity.

At a time when various initiatives grappling with the city’s housing and homelessness crisis are still in the earliest talking stages, the city should not be creating a whole new group of homeless families.

Perhaps someday, if the hoped-for goals of transit-oriented development are delivered, if the amorphous plans about housing the homeless ever do take shape, Honolulu officials will have the luxury of pushing more of its affordable housing inventory up-market. But that opportunity is certainly not before us now.