The partnership that agreed to pay $142 million to purchase 12 Honolulu affordable-housing complexes from the city now has until Monday afternoon to respond favorably, or it’s likely the deal will be nixed.

"It is a collapsing deal," Honolulu Managing Director Ember Shinn told a City Council committee Friday. "If it is salvageable, it will be through some efforts that will be extraordinary. And we are uncertain at this time about the outcome."

City Budget Director Nelson Koyanagi said if the Honolulu Affordable Housing Preservation Initiative (HAHPI) deal falls through, there could be a $20 million shortfall in the current $2 billion operating budget, and the loss of millions of dollars that had been targeted for improvements and nonprofit/social service programs. The buyers also have argued that recent actions by the Council represented a breach of its contract, putting the city in a "default" situation and responsible for $4 million it has spent to date on trying to close the deal, as well at least $2 million in damages.

Shinn, serving as acting mayor during Mayor Kirk Caldwell’s 17-day family vacation, described the complex HAHPI transaction as "probably the largest financial deal the city has done in a very long time."

The Caldwell administration stands ready to do "anything" to close the deal with Honolulu Affordable Housing Partners LLC, Shinn said, including extending "seller financing" that would allow the buyers to use the city’s leverage to meet its financing obligations.

But city officials first want to hear from the partnership’s representatives that they intend to complete the deal by the scheduled closing date of March 31.

"If we do not hear from them, then I’d say there’s a good chance that the deal is dead," Shinn said.

No one from the partnership attended Friday’s meeting.

Several members of the Council’s Executive Matters and Legislative Affairs Committee expressed unhappiness that no one representing the buyers attended.

Honolulu Affordable Housing Partners also did not respond to a call and email from the Honolulu Star-Advertiser seeking comment.

At their core the 18-month-long negotiations involve the sale of a 65-year leasehold interest in 12 city rental housing projects. Some of those complexes include mixed-use space, and some feature required public parking areas. "These type of arrangements affect the financing package that the buyer has been trying to obtain," Shinn told the committee.

In the latest exchange between the city and the buyers, Honolulu Affordable Housing Partners official William Rice on Tuesday asked that the city extend the Dec. 31 deadline for the buyers to submit information proving the financial viability of its purchase with the city until March 31, the deadline for closing of the sale.

In a written response to the buyers, Koyanagi said the administration would agree to extending the financial assurance deadline if the buyer could guarantee that doing so would lead to "a reasonable possibility that such an extension will enable (the buyer) to close by March 31."

Koyanagi gave the buyer until 4 p.m. Monday to respond.

Shinn stressed that despite the rhetoric and legal posturing by both sides, "there is a sincere interest and intent (by the buyers) to make this deal work."

Meanwhile, the city asked Honolulu Affordable Housing Partners and the two other top HAHPI bidders whether they were interested and would be able to close a deal for the properties by March 31. Both of the losing bidders submitted responses, while Rice’s group did not, Shinn said.

But Shinn also stressed Friday that the administration still believes a deal with Rice’s consortium remains the best option.

She listed seven reasons, among them the fact that the "creative financing" proposed by the buyers offered the best return for the city, retained the most number of units at existing affordable rental prices, and was the only one to offer substantial improvements to the housing units.

As part of the deal, Honolulu Affordable Housing Partners promised to invest $50 million in improvements to tenant properties and to keep 84 percent, or 971 units, in rental price ranges meeting the needs of families making 60 percent of median income or less.

The two other bidders, Shinn said, submitted responses to the city’s query with financial and policy terms "insufficient" to meet the debts the city incurred from the housing complexes.

Shinn said the administration also believes it highly unlikely the city will "get a better deal" if it started the sales process from scratch and that doing so would likely take the city two additional years to complete. Meanwhile, she said, the city is spending $8 million annually to maintain the buildings.

If no deal with Honolulu Affordable Housing Partners can be completed, the city would likely go back to the other two top bidders to come up with "any other kind of business deal that makes sense," she said.

Regarding the suggestion that the city would amenable to the idea of "seller financing," Shinn said in response to questioning that she is not clear what that would entail.

City Community Services Director Pam Witty-Oakland said the winning partners have been able to secure all but $50 million of the necessary funding to finish the deal.

Committee Chairman Ron Menor urged Shinn to keep the Council appraised of developments.

Council Budget Chairwoman Ann Kobayashi urged the administration to keep the plight of existing tenants in mind through negotiations.

Council Chairman Ernie Martin, after the meeting, said he would have considered extending the deadline for finalizing the HAHPI sale if either the administration or the buyers asked Friday, adding that he agreed with Shinn that the current buyers offered the best deal for the city.

Shinn told reporters after Friday’s meeting that following the Council’s refusal to support an extension last month, the administration left it up to members to decide whether to consider an extension, and they chose not to do so.

Former Mayor Peter Carlisle announced the selection of Honolulu Affordable Housing Partners as the successful bidder from a pool of seven potential purchasers in June 2012.

A purchase and sale agreement was approved by the Council in October 2012.

Public awareness that the deal was on shaky ground emerged in early December when a group of Council members headed by Martin introduced resolutions calling on the administration to either nullify or delay the HAHPI sale because they were dissatisfied with the way the administration determined how proceeds would be spent.

While the Council chose ultimately to drop the resolutions, Rice told city officials that the introduction of the resolutions constituted a breach of its sales agreement that triggered a default on the city’s part, making it nearly impossible for the buyer to retain its financing strategy.

The Council, meanwhile, also rejected a plan pushed by the administration to approve a resolution reaffirming the deal and agreeing with its recommendation to extend the negotiations deadline indefinitely.