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The YMCA of Honolulu has terminated a joint venture to redevelop its 67-year-old Central Y property near Waikiki after six years of effort and delays. Read more

The YMCA of Honolulu has terminated a joint venture to redevelop its 67-year-old Central Y property near Waikiki after six years of effort and delays.

But the nonprofit organization won’t be walking away empty-handed. The YMCA will get $2 million after an arbitrator ruled it is entitled to $1 million in damages plus $820,000 in legal fees and $126,000 in costs from a development partnership it was working with to build new facilities and a 128-unit condominium tower at the Atkinson Drive location. The nonprofit also previously retained $800,000 of deposit funds from the developer.

The arbitration decision was made in January and filed in U.S. District Court on Wednesday.

The ruling followed years of contentious negotiations between the YMCA and San Francisco-based MB Property Acquisitions LLC and Aloha Kai Development LLC, an affiliate of Tokyo-based Tama Home Co. Ltd.

The YMCA has said the redevelopment plan was initiated to alleviate a growing financial burden for maintaining the Central Y facility, which covers 1.8 acres across from Ala Moana Center and includes a fitness center, swimming pool, youth programs and 115 residential rooms that are rented to residents and visitors for as little as $45 a day and as much as $1,200 a month.

Under a deal signed in 2012, the YMCA agreed to sell 1.5 acres of the site for the condo project for an undisclosed price and planned to use sale proceeds to finance a new facility on the remaining land. After the developer was able to obtain regulatory approvals that included a city zoning change needed to make the tower taller and denser, it had a March 31, 2016, deadline to complete the land purchase, according to the arbitration order.

In preparation for redevelopment work, Central Y facilities closed in 2015 except for the apartments. Aloha Kai struggled to complete its purchase and start work, and a month before the March 2016 deadline, the developer made an effort to involve condo developer OliverMcMillan, but that fell through.

YMCA officials agreed to give Aloha Kai an additional month in return for collecting $800,000 of a $1 million deposit from the developer; however, the company still failed to pay for the property.

A day before a new deadline of April 2016, Aloha Kai demanded mediation/arbitration but continued to engage in negotiations with the YMCA to salvage the deal. Those negotiations, the arbitration report shows, contemplated more extended deadlines, additional payments, collateral and even new design details including a basketball court. Proposals and counterproposals were drafted but never signed by both parties.

In July 2016 the YMCA notified Aloha Kai that it had terminated the agreement in part because “the parties have no meeting of the minds, and they are way too far apart on the material terms that the YMCA needs,” the order noted.

Then in August 2016, Aloha Kai told the YMCA it had delivered the purchase money to escrow and was ready to complete the acquisition. The YMCA held that it had already terminated the sale contract.

An arbitration hearing, which lasted about a week and included legal briefs and expert witnesses, was held in December. Local attorney and arbitrator David Fairbanks ruled, “Without such a signed, written agreement from the YMCA, there was also no enforceable agreement to close the transaction after April 30, 2016.”

The purchase contract contained a provision for the developer to pay $1 million in damages for failing to complete its purchase. Fairbanks said the $800,000 the YMCA collected in return for a contract extension cannot be applied to the damage award.

A judge is scheduled to hold a hearing in May to confirm the award.

YMCA President and CEO Michael Broderick said in a statement that he couldn’t comment on the case because of confidentiality provisions. He also said he couldn’t discuss what the YMCA intends to do with the property because the case isn’t over yet.