It seems counterintuitive, but one of the challenges in providing affordable rentals appears to be securing the tenants who are willing to apply, and who qualify to move in.

State and county officials are pressing for development of more rentals priced for individuals and families who don’t earn enough to buy a home. They have set rules that are meant to channel the lower-cost homes to people who otherwise struggle to afford housing.

But some developers say constraints make the application process inflexible, a hard needle to thread.

And units that go unrented in this costly environment will deter developers from building them, said Stanford Carr — even more than they are already. Stanford Carr Development is one of the partners producing the city block of residential and retail complex bounded by South and Pohukaina streets, what Carr called the first transit-oriented development project (the rail station is on its Halekauwila Street side.)

For months the affordable component — the 209 Keauhou Lane rental units on Keawe Street — have been on the market, and only a quarter of them are occupied.

One reason: Under the agreement with the state Hawaii Community Development Authority, these units must be affordable to those earning up to 100 percent of the area median income (AMI) — even a little bit more than that disqualifies the applicant.

“Both HCDA and the city are dictating that if you’re at 100 percent AMI, you need to make no more than 100 percent,” he said. “If someone makes 100.1 percent — meaning at least $500 a year over — he can’t rent in that apartment.”

On top of that, Carr said, the HCDA requirements put the applicant through an income and asset check that has many looking elsewhere for housing instead.

“If I gotta give you tax returns, my pay stubs — open kimono — I’m going like, ‘I’m not going to do this,’” he said. “I’m going to rent somewhere else … without the hassle.

“That’s the problem,” Carr added. “The government is actually creating the impediment.”

This issue does not apply uniquely to HCDA, which oversees redevelopment in Kakaako, and it’s not unique to that community. It can be especially difficult, however, for projects that deliver many units to the rental market at once.

Christine Camp is president and CEO of Avalon Group, which built the 7000 Hawaii Kai Drive rental apartment complex. Avalon’s unilateral agreement with the city meant that of the 269 units, 54 are reserved for those earning at 80 percent AMI. That’s a monthly of $2,603 for a three-bedroom and $1,771 for a two-bedroom apartment.

The larger units are the toughest to rent, she said; there is a waiting list for the smaller ones. Those who can readily manage a $2,600 rent earn too much to meet the income limit, she said.

“We reduced it to $2,100, and we still have 10 left,” she added. “Many of them would rather wait for the two-bedroom and two-bath unit for $1,771.”

Camp said the company has tried offering the market-priced rentals at a reduced rate, but many people don’t have much of an income margin to play with.

“We reduced to $1,995, but they preferred to wait,” she said. “That difference of $187, it was too much for them.”

Easing a somewhat inflexible application process while still getting the homes to people who need them is a goal shared by developers throughout the state. In phased, low-density projects such as Alaka‘i Development’s Kapolei Lofts rental complex, applicants have a high bar to meet the qualification requirements.

But the fact that units come onto the market more gradually makes them more competitive, said Cayenne Pe‘a of Alaka‘i. Along with Jon Wallenstrom, she oversees the leasing of the units at the sprawling West Oahu complex, which is almost fully occupied now.

There is strong demand, Pe‘a said. “We had people camping out, sleeping over three nights, just to pick up the application.”

But there is a deterrent, especially for the higher- rent units, Wallenstrom said: the government-mandated paperwork involved in qualifying.

Of the 499 units, 300 are reserved as affordable, with 100 for renters earning up to 80 percent of the area median income.

The rest are rentable to those earning up to 140 percent AMI, Wallenstrom said, but faced with the application hassle, some prospective tenants need a rent discount as persuasion.

“Less paperwork would be better,” Wallenstrom said. “The people these programs are set up for should be able to get into a home as easily as possible.

“The maximum is 140 percent AMI, but the rents are lower than that. You do have to provide some financial incentive.”

KAMEHAMEHA Schools delivered 54 studios at the low-rise renovation of Six-Eighty fronting Ala Moana Boulevard and the 88 units in The Flats at Pu‘unui on Keawe Street as the affordable-rental component in its Kakaako redevelopment.

Both projects are “at or near capacity” now, said Aron Dote, a Kamehameha spokesman, but he also acknowledged that “it did take a little bit of time in the process to do the qualification.”

The projects received no public financing, but affordable-rental requirements for Hawaii are largely guided by rules and income thresholds defined by the federal Department of Housing and Urban Development (HUD) and the Hawaii Housing Finance and Development Corp, said Kamehameha executive Paul Kay.

Kay, asset manager for the nonprofit land trust, agreed generally that “simplification is always a good thing.” However, he emphasized that Kamehameha has a different viewpoint on the issue than the for-profit developers. For starters, the schools are supported by investments of the legacy Bishop Estate lands, and the trust has a history of leasing property.

“From the KS perspective, we like rentals, especially in a place like Kakaako,” Kay said. “We believe it’s an important comp of a diverse community.

“We do rental housing, frankly, because it is a business we know.”

Still, said Carr, if the state and city want to see more of these projects built, officials will need to streamline the process and make it easier for developers to lease their rentals. Keauhou Lane was built by the Portland-based Gerding Edlen, who is not going to be motivated to do more of these if it means units remaining vacant and producing no revenue, Carr added.

For her part, Camp has observed a tendency for prospective tenants to choose a lower cost over additional bedrooms and space. For future projects, such as the one Avalon is planning off Kapiolani Boulevard, she is watching the progress of projects such as the Howard Hughes-built tower A‘a‘li‘i, which features micro-units, to see how that goes.

They are for-sale units, but some buyers are likely to turn around and rent them, Camp said.

“We really want to get to the people who really need it,” she added. “I am not doing three bedrooms, I am doing smaller units. Then people can afford it at the price I can deliver.”