An owner and a manager of two small businesses in Aiea that are being displaced by the Honolulu rail project say the city is pushing them out without paying them fair compensation, and both businesses are expected to close.

Jason Chong, 50, said he invested $250,000 in borrowed money to launch his Kiawe Grill BBQ & Burgers location along Kamehameha Highway, but now the city is telling him he must vacate the space he leased in the building by the end of the month.

"People like us, we don’t own the property, it’s like we have no right to be here," Chong said. "It’s worse than China, worse than North Korea, what they’re doing to us."

Jerry Iwata, real estate acquisition manager for the Honolulu Authority for Rapid Transportation, said the city has been negotiating with the tenant businesses in the building at 98-080 Kamehameha Highway since April to try to reach agreement on a new lease.

Three businesses on the property have declined to sign a lease or pay rent, and the city reckons among them they now owe $89,000 in back rent. In a show of "good faith," HART has also been paying common-area maintenance fees for these tenants, fees that now total about $11,600, Iwata said.

With no lease in place, the city has serious concerns about liability in the event an employee or customer is injured on the property, he said.

"Ample time has clearly been provided to these tenants, they have been treated fairly, with respect, and we have followed the Uniform Relocation Act regarding relocation," Iwata said in a written statement. "But HART also has the responsibility to protect taxpayers’ interests. HART has been more than fair and must now protect the public’s interest."

The city in May paid $7 million to buy the strip mall from owner David Nakamura, and HART plans to clear the site for construction of the Pearlridge rail station.

Chong said the city is willing to pay his relocation costs, and later added it has also offered to help him cover a portion of the rent at a new location if the new rent costs more than his current space. He said he has been unable to find a suitable, affordable new location.

"To reopen this location will take some time and some money, but so far they never approached me with any options. I know there’s a lot of options they can do."

Chong said he refused to agree to lease proposals by the city because various city representatives made conflicting offers, and because the city backed away from its initial proposal to halve the tenants’ rent.

Another tenant in the building is The Kennel Shop, a pet supply business that was founded by Tom Minton 31 years ago. Minton has since sold the business, but continues to manage the store.

After he invested $60,000 in improvements to the property five years ago, Minton said the city has issued him a notice that he must leave by the end of the month. The Kennel Shop also has no lease, and Minton said the business has not paid rent since March.

Minton said he has been unable to find a suitable new location for the shop, and has dramatically scaled back on ordering inventory because he was worried the business would have to close. He said sales at the shop are about 10 percent of last year’s level.

"After 31 years, the city is basically closing us down because we can’t find another location," he said. "They are offering us $20,000 to move, but we’re not going anywhere because we can’t find a place to move."

Construction on the $5.26 billion rail project has been interrupted by a ruling by the Hawaii Supreme Court that required the city to complete an archaeological inventory along the entire 20-mile rail route.

However, the city is continuing with design work, property acquisition and other activities based on the assumption that construction will soon resume.