Neighbors of a planned Kakaako workforce housing condominium tower approved by a state agency last month are appealing the decision, calling it an abuse of discretion that violates state law and numerous agency rules.

The association of apartment owners at Royal Capitol Plaza recently filed a legal petition against the Hawaii Community Development Authority, asking to invalidate a development permit for the second phase of the project at 801 South St.

Royal Capitol residents retained Honolulu attorney Carl Varady, and he filed the petition Jan. 2.

"The actions of HCDA in approving the Phase II permit were clearly erroneous, arbitrary and capricious, and characterized by both an abuse of discretion and a clearly unwarranted exercise of discretion," the petition said.

Allegations in the petition are far-ranging. They include contentions that the HCDA’s approval of the permit was predetermined before public hearings, that the traffic impact from the 1,700 parking stalls in 801 South’s two phases constitutes a public nuisance, that HCDA rules violate the state Constitution and that the Legislature improperly delegated authority to the agency.

HCDA Executive Director Anthony Ching reserved comment and said state attorneys are reviewing the petition.

The developer of 801 South, Downtown Capital LLC, led by local affordable housing developer Marshall Hung, declined comment given that the petition was filed against HCDA.

The $400 million 801 South project comprises two 400-foot residential towers, Tower A and Tower B, and a pair of separate roughly 100-foot-tall parking garages.

Downtown Capital previously said it planned to start sales for Tower B’s 410 units by March followed by construction sometime between April and September. The first phase of 801 South, Tower A with 635 units, is under construction and was approved by HCDA in late 2012.

The timing of the two phases is one issue being challenged by Royal Capitol. The petition claims that Downtown Capital obtained sewer connection approvals for both towers in May 2012 and let the HCDA know it was seeking to build two towers, though the HCDA didn’t reveal the project’s full scope until after it approved the first tower.

"Artifically breaking a single project into parts for piecemeal consideration seriously impacted ‘meaningful’ community engagement required by (state law governing HCDA)," the petition said. "Petitioners and the public were not fully and fairly informed of the magnitude and, specifically, Phase II, of the project, until late August 2013."

Other challenges in the petition argue that 801 South doesn’t satisfy HCDA rules regarding recreation space, tower footprint size, driveway positioning, green building standards, curb cut spacing and other design details.

HCDA’s board granted 801 South some rule exemptions under provisions for "workforce housing" projects that don’t use government financing, but make at least 75 percent of units affordable to households earning no more than 140 percent of Honolulu’s median annual income.

Royal Capitol’s petition claims that 318 of Tower B’s 410 units don’t meet the affordability requirement. This argument was made by some Royal Capitol residents at contentious HCDA hearings was and rejected by the agency.

Other Royal Capitol residents complained during hearings that 801 South is ugly and too dense, and creates a wall that blocks views.

Jesse Ryan Allen, a spokesman for the Tower B opposition group Kakaako Cares, said the group doesn’t oppose workforce housing.

"We are workforce people living in Kakaako," he said in a statement. "We want to see more workforce people move into our neighborhood, but we know very few of them can actually afford a unit in Tower B. We want our future workforce neighbors to have open space, recreational space, designated parking stalls, pedestrian-friendly layouts and all the other ‘smart growth’ visions described in the HCDA Kakaako plans. They don’t need to suffer crowded conditions and parking garage views because they don’t earn enough."