Members of the Hayward City Council on Tuesday chastised a developer whose conversion of an apartment complex into affordable housing is displacing some of the current tenants. City leaders said they were misled about the impacts, but the council stopped short of intervening and instead pushed the conversation off to a later subcommittee meeting.

The discussion came after The Chronicle reported that the developer, Reliant Group, was displacing residents throughout cities in the East Bay, including Hayward, Antioch and Hercules, through its affordable housing conversions using state tax credits and housing revenue bonds.

In Hayward’s case, the City Council unanimously voted last March to adopt an emergency ordinance amending its just-cause ordinance for tenant evictions to exempt affordable-housing-conversion projects. The ordinance allowed Reliant to begin the process to convert the property at Leisure Terrace, a 68-unit naturally occurring affordable housing complex.

“We made the just-cause-ordinance exemption under different pretenses, different information and a lack of information,” Councilwoman Aisha Wahab said at the council meeting Tuesday. “We made a bad judgmental call.”

Wahab introduced a council referral to take corrective action against Reliant. The action would have directed city staff to work on a policy that would have compensated displaced tenants, direct Reliant to stop all evictions and remove the just-cause-ordinance exemption that paved the way for the conversion.

The referral was not supported by three members of the council — Mayor Barbara Halliday, Councilwoman Sara Lamnin and Councilman Al Mendall.

“This is a very unfortunate situation,” Halliday said at the meeting. “What was a nice community in a rental housing community in our city has been broken up, but ... it’s not going to be put back together by anything we can do.”

The council instead voted unanimously to hold a special housing subcommittee meeting in four to six weeks to discuss what steps can be taken to prevent a similar outcome in the future. Councilman Mark Salinas committed to have a meeting with Reliant and impacted tenants.

“If Reliant can solve this before we have to take action, I’d like to see this,” Salinas said.

Wahab said Wednesday she was disappointed her referral didn’t pass, but her primary goal in the subcommittee meeting is to remove the exemption from the just-cause ordinance so that this doesn’t happen again.

“The fact that we can’t correct a wrong is very disappointing to see in city leadership when there are everyday folks, mothers, fathers, teachers grandparents, students that are struggling to just have a roof over their head,” she said.

Prior to the meeting, Reliant Management President Joe Sherman sent a letter to Halliday and the City Council and said claims that the conversions throughout the Bay Area would result in close to 1,000 evictions are false. He said that across all the properties in Antioch, Hercules and Hayward, a total of eight units were being evicted — three of which are pending at Leisure Terrace.

At the meeting, Sherman said the project has provided a necessary seismic retrofit to the property, created Americans with Disabilities Act units, installed solar panels, and renovations to the interior and exterior of the property.

“And what was the cost to the city of Hayward? Zero,” Sherman said. “You are to be congratulated.”

Sulaiman Hyatt, organizer with Housing Rights Committee of San Francisco, said most residents received a notice to vacate, which notifies tenants that the landlord will seek an eviction.

“Almost everybody here got a notice to vacate,” Hyatt said at the meeting.

More than a dozen current and former tenants disputed Sherman’s claims in the letter and spoke during public comment about how they were forced to leave. Some residents, including Brittney Abraham, said they were told they didn’t income qualify and had to leave.

Abraham, a preschool teacher who makes $38,000 a year, had been living at Leisure Terrace for nine months with her boyfriend when she was told she didn’t qualify for a unit. She was able to find a new place, she said, after using her savings account to pay a deposit and first month’s rent.

“Everyone here was scared and still are suffering emotionally and financially,” she said at the meeting. “We just hope that you guys can make this right.”

Nayelli Blanco, 42, had been living at Leisure Terrace since 2010 and said she received an eviction notice to leave by Nov. 8. She was told her income was too high to qualify for the new units.

Blanco said she enlisted the help of Centro Legal De La Raza and found out that her income actually qualified for the new affordable housing units.

“Reliant Management lied to me twice,” Blanco said at the council meeting. “I have everything to prove that I income qualify.”

Sarah Ravani is a San Francisco Chronicle staff writer. Email: sravani@sfchronicle.com Twitter: @SarRavani