Sales are slated to start Saturday for units in a planned Kakaako condominium tower that has been both praised as middle-class housing produced without government subsidy and derided as an overly dense blight to the community.

Local development firm Downtown Capital LLC is launching sales for the 410-unit project called 801 South St. Building B after receiving a permit in December from the Hawaii Community Development Authority, the state agency governing development in Kakaako.

Units with one to three bedrooms are priced from $352,000 to $699,000.

A sales office is scheduled to open in Iwilei at 10 a.m. next to the Costco gas station, though prospective buyers will be selected by lottery. There will be two lotteries. The deadline for putting your name in for the first lottery is March 28. The lottery will be held March 29. A second lottery is planned for April 12.

Building B represents a second phase of 801 South at the corner of South Street and Kapiolani Boulevard where an initial tower with 635 units is under construction after a quick near sellout last year.

Units in Building B are bigger and priced higher than the first tower where studio to two-bedroom units sold for $250,000 to $500,000, yet remain within HCDA affordability limits under an agency "workforce housing" rule that allowed Downtown Capital to double the density of development on the site.

Marshall Hung, a veteran Honolulu affordable-housing developer who heads Downtown Capital, said in a statement that 801 South is designed for middle-class Oahu families.

"We have grown increasingly concerned that too much housing now being built can only be purchased by upper-income households and by wealthy out-of-state individuals and that very few new projects are being built for the working middle-class families in our community," he said.

However, putting two 400-foot towers on the 3.7-acre property along with two detached 100-foot parking garages drew complaints mainly from residents in the neighboring Royal Capitol Plaza condo tower who challenged the project on grounds that included Building B is too close and prices are too high to be considered affordable. Neighbors also objected to HCDA’s board allowing the parking garages to exceed a 65-foot height limit for such structures.

HCDA’s workforce housing rule allows the agency to deviate from limits for the benefit of providing homes that are designated for moderate- to high-moderate income residents and developed without government financial assistance.

To qualify, a project must make at least 75 percent of units available to households earning no more than 140 percent of Honolulu’s median income, which equates to $84,574 for a single person, $96,656 for a couple or $120,820 for a family of four.

Downtown Capital agreed to offer Building B units for an initial 60 days only to buyers within the income limits, but after that can sell units to buyers regardless of income.

In the first phase of 801 South, about 6,000 prospective buyers picked up applications. However, only about 65 percent of units roughly 400 out of 635 were sold to buyers under the income ceiling.

Project opponents said the preference-only policy is flawed and that higher prices in Building B will likely result in sales to even fewer buyers meeting the income limits.

The developer contends that even with investors buying 801 South units, those units will wind up as rentals for middle-class residents because unit sizes and a lack of amenities such as a pool or recreation deck will limit market rental rates.

The bulk of Building B units, 182 of 410, are designed with two bedrooms and about 940 square feet of space, and top out at $550,000. There are 45 three-bedroom units with 1,331 square feet and prices between $617,000 and $699,000.

Construction is anticipated to begin this summer.