It’s a blow to a key Caldwell initiative, but it may be good for affordable housing. The city’s planned sale of its affordable housing properties has failed:

A deal that would have netted the city $142 million for the long-term leases on 12 rental housing complexes was nixed by the prospective buyer, city officials announced tonight.

William Rice, an official with the managing partner of Honolulu Affordable Housing Partners LLC, said in a letter to city Budget Director Nelson Koyanagi that the group would not be able to come up with $35 million demanded by the city by March 31, the deadline for closing specified in an August 2012 sale agreement.

The collapse of the deal leaves a $20 million puka in the city budget, which will likely increase the call for creative revenue options, such as bus advertising.