A state board has expressed concern over a request by a developer to deliver homes to renters instead of buyers at a planned $200 million residential tower in Kakaako that satisfies affordable-housing rules.

The Hawaii Community Development Authority, a state agency governing the project known as 988 Halekauwila, allows both for-sale condominiums and rental apartments. But the permit obtained by developer Howard Hughes Corp. in 2013 was based on the tower being a condo.

The first of two public hearings was held Wednesday by HCDA’s board to consider a request by Hughes Corp. to amend its permit to allow development of 988 Halekauwila as a rental building, which it prefers.

Race Randle, vice president of development in Hawaii for Texas-based Hughes Corp., emphasized that the company is asking only for what is allowed under HCDA rules, and that the building’s design and cost remain unchanged.

"We are asking for the flexibility to pursue rentals," he said.

However, a concern expressed by board Chairman John Whalen and echoed by one other member was that Hughes Corp. could convert the building to market-priced condos for sale after 15 years when presumably the value of units will be much higher in part because the city plans a rail station nearby.

Randle said he couldn’t speculate if 988 Halekauwila units would be sold as condos after 15 years. "We really can’t say," he said. "We just don’t know."

Randle said the company decided to seek the change because demand is far greater for midpriced rentals than condos, and that making 988 Halekauwila rentals will advance the start of construction, provide homes for people with lower incomes and keep the homes affordable for longer.

Under HCDA rules for moderate-price housing that is subsidized by developers in return for higher building densities, condos are reserved for residents earning no more than 140 percent of Honolulu’s median income while rentals are reserved for residents earning no more than 100 percent.

Income at 140 percent equates to $85,200 for one person or $121,700 for a family of four. At 100 percent, the comparable limit is $60,850 or $86,900.

The difference in monthly housing costs would be $940 to $1,267 depending on family and unit size, according to Hughes Corp. For instance, a one-bedroom unit would cost a couple $1,739 in rent or $2,679 in a mortgage payment, the company said.

Randle also pointed out that if 988 Halekauwila is built as a condo, HCDA rules allow buyers to sell their units at market rates after two to five years.

Bob Nakata, a representative of affordable-housing advocacy group Faith Action for Community Equity, told the board that he could support the requested change if the period for maintaining affordable rent was 30 years.

"You have a difficult decision before you," he told the board.

HCDA rules applying to 988 Halekauwila specify that the affordable rental term for such projects be a minimum of 15 years, which led to some discussion of whether the board could require a longer term.

Randle said a longer term would upset financing and force the company to reassess whether rentals are preferred.

David Samson, a representative of the Hawaii Regional Council of Carpenters who testified in support of the developer’s request, said more of Honolulu’s work force needs affordable homes. After being asked by HCDA board member Steven Scott about losing such homes after 15 years, Samson said renters could save money to buy a home over that time.

Dennis Oshiro, executive director of the Hawaii HomeOwnership Center that helps mostly low-income residents prepare for buying a home, shared Samson’s view and expressed support for more affordable rental housing. After the hearing, he said he would specifically support the change to rentals for 988 Halekauwila.

Paul Brewbaker, a local economist who was retained as a consultant by Hughes Corp., suggested that HCDA’s board doesn’t need to debate differences between moderate-priced rentals vs. condos.

"We just need more of everything," he said, noting that not enough new housing is being built on Oahu to keep up with new household formation.

The 988 Halekauwila tower will partially satisfy an HCDA requirement that Hughes Corp. make 20 percent of all residential units in its 4,300-home Ward Village master plan affordable to residents with moderate incomes.

Hughes Corp. said it requested the change from condos to rentals after a market study commissioned from The Concord Group showed that Oahu has roughly eight times as many households qualified to rent (74,128) as opposed to qualified to buy (9,330) under HCDA requirements that also include asset limits.

Randle said building a condo would require attracting a high percentage of buyers before construction could begin. With rentals, construction could start by the end of the year if HCDA approves its requested change.

HCDA is expected to make a decision at a public hearing on April 22.