A local U.S. housing official warned Mayor Kirk Caldwell Wednesday that the city could be forced to repay nearly $8 million for failing to find commercial tenants for the Chinatown Gateway Plaza building on Nuuanu and Hotel streets.

At issue is the city’s use of $7.9 million in Community Development Block Grant funds to either purchase or make improvements to the rental tower. Currently, all commercial spaces on the ground floor are unoccupied except for one unit leased by Strode Montessori Infant and Toddler Center, U.S. Department of Housing and Urban Development official Mark A. Chandler said in his letter.

“The Chinatown Gateway Plaza commercial spaces have been vacant for far too long,” said Chandler, HUD’s Hawaii director of community planning and development. “If the city cannot put the vacant commercial spaces in Chinatown Gateway Plaza in use, satisfying a CDBG eligible use and national objective … the city will have to repay the CDBG program at a minimum $7,940,804.00 and as much as the current fair market value of the property less any non-CDBG funds that were used to acquire and/or improve the property.”

City Land Management Director Sandra Pfund, in a statement to the Honolulu Star-Advertiser late Wednesday, said the city has been trying to lease the space to suitable tenants but has been unsuccessful because the plaza lacks available parking and the market for office space in the area is soft.

Chandler asked for a meeting with Caldwell to discuss the issue.

HUD has offered suggestions on how the vacant commercial spaces could be used, including relocating the city’s Fort Street Satellite City Hall to to the plaza, having a city ambulance service open there to speed up response time and provide walk-in services to the community, moving a business into the space “as an economic development activity” and having the Salvation Army use the space to provide public services.

Pfund said the city has received several inquiries about the commercial spaces, “but the lack of available parking has been an issue for several of the proposers.” Other potential lessees have asked that they not be required to pay rent or common area maintenance fees, Pfund said.

“The city is seeking a tenant that can provide some amount of revenue in order to save taxpayer funds,” she said, and recently began working with a professional commercial leasing agent to search for potential revenue-producing tenants.

“The Chinatown area has a lot of vacancies for commercial space and part of the challenge is overcoming a soft market,” Pfund said.

ON THE MOVE

Hawaiian Hotels & Resorts has announced the following executive promotions:

>> Jansen Medeiros to vice president of operations from managing director

>> June Pagdilao to vice president of sales from director of sales.

>> Jerry Sager to vice president of revenue from regional director of revenue management.

>> David Knight to director of operations from regional operations manager.

>> Kory Strona to director of revenue management from regional revenue manager.

Bank of Hawaii has promoted Matthew Emerson to senior executive vice president and director of eCommerce, which is within Bank of Hawaii’s Digital Channels Division. In his new role, he will then become a member of the bank’s Managing Committee. Emerson joined Bank of Hawaii in 2010 and served as vice president and internet banking manager in the Online and Mobile Banking Department.