Councilman’s opposition of condo cited as illegal

A developer with investors from China is accusing City Councilman Ikaika Anderson of trying to illegally oppose a planned condominium tower because some units are intended for sale in China.

The developer of the project called Hawaii City Plaza emailed Anderson a letter last week, saying the councilman made discriminatory remarks at a May 4 Council committee meeting in which the project came up for discussion in relation to affordable-housing rule amendments the city wants to implement.

”We deem that your racial remarks have violated federal law and employment discrimination law,” said the letter from father-and-son development executives Johnson and Jay Fang of Hawaii City Plaza LP. “It is illegal to oppose the project just because we anticipate to sell to Chinese.”

Anderson said on Friday he isn’t discriminating against anyone, and that his big problem is with a federal immigrant investor program the developer is using to finance the proposed 163-unit tower.

Anderson also said he isn’t interested in approving a project that seeks a density bonus for being near the city’s planned rail station at Ala Moana Center when the developer expressed a view in a written letter that people who ride mass transit cannot afford units in the planned building.

Johnson Fang said in an interview through an interpreter on Friday that he believes much of the clash is due to miscommunication between Council members and his son, who testified at the May 4 meeting.

At that meeting, there were questions that weren’t understood and conflicting statements by Jay Fang, also known as Zhe Fang, on whether 60 percent of Hawaii City Plaza units were sold or being marketed to investors in China who are providing capital to build the tower.

The Fangs are using a federal program called EB-5 in which foreign investors who contribute at least $500,000 to a business that employs Americans in economically distressed zones can receive green cards conveying U.S. residency.

Johnson Fang said 60 EB-5 investors in China are contributing $30 million toward the $50 million project but that they have no priority right or reservation to buy units in Hawaii City Plaza. They are equity partners who can get their financial contribution back after five years, he said. At that point it is likely that all condo units in the project would have been sold, he added.

These investors could buy a condo unit on top of their investment, Fang said, though he explained that no units can legally be sold now because the project does not have entitlements to be built.

In their letter to Anderson, the Fangs threatened to call for a boycott. “If you insist on opposing our project for the reason that we will sell the majority to Chinese customers, I will call on Chinese to not visit Hawaii,” the letter said. “I will also call on them to not make investment or buy property in Hawaii because some Hawaiian do not welcome Chinese. Your remarks have hurt the economy, especially the tourism, hotel industry, restaurant industry and the real estate industry in Hawaii.”

Johnson Fang, who once ran a travel agency in Waikiki but then moved to California to do real estate development, said on Friday that he does not wish to fuel contentions, and that he is willing to give Hawaii residents a preference for buying Hawaii City Plaza units. “We want to make contributions to local people,” he said, adding that his company would like to do other charitable projects like providing 50 homes for the homeless.

In Anderson’s exchange with Jay Fang on May 4, Anderson felt as though the younger Fang wasn’t being truthful or clear about whether units were being sold to EB-5 investors.

“We want to make sure you’re marketing your units to people here — not bringing people from offshore,” Anderson said during the meeting at which he expressed opposition to approving a permit for Hawaii City Plaza. “We have enough of a housing shortage as it is. I have no intent of adding to it.”

Councilwoman Ann Kobayashi questioned whether there would be constitutional problems limiting foreign buyers in a market-priced condo tower. Anderson asked if perhaps the Council could limit the number of EB-5 investors who could buy units in the project or deny approval for the project if members don’t like the EB-5 program.

Part of Anderson’s criticism of the EB-5 program is that it considers the project site at 710 Sheridan St., which is a little mauka and Ewa of Walmart, as economically distressed with moderate to high unemployment. “It’s not appropriate,” he said. “That part of Honolulu does not have high unemployment rates.”

Fang, however, said the company is abiding by the federal designation that was approved by the state, and that he suspects Anderson doesn’t like Hawaii City Plaza because his company expressed an intent to use nonunionized labor to build the tower.

The comment about not using unionized contractors was made as part of an offer to contribute $2 million to help build the city’s rail project. The letter to Anderson alleged that the councilman is beholden to unions. Anderson said he has no problem with Hawaii City Plaza using nonunionized labor as long as workers are local and skilled.

Johnson Fang on Friday said his company is willing to work with union labor on Hawaii City Plaza except for a general contractor position that his own construction company intends to hold.

Fang added that he hopes to meet personally with Anderson to resolve differences and misunderstandings. Hawaii City Plaza needs City Council approval for a permit that would give the project added density in return for community benefits, including affordable housing for local residents, because the project is near a rail station.

The Council is considering a broad standard for trade-offs pertaining to development near rail stations, including requiring that 30 percent of residential units at such projects be affordable. At the May 4 meeting, Jay Fang said that requirement would not be feasible, but Johnson Fang said on Friday that he is OK with such a requirement.