City officials told the City Council Budget Committee Wednesday that they will relocate the underground Fort Street Mall satellite city hall to the city’s street-level Chinatown Gateway Plaza tower two blocks away.

The move by the Department of Customer Services was confirmed by city Land Management Director Sandra Pfund during a budget briefing.

The city was warned in October by an official with the U.S. Department of Housing and Urban Development that it needed to make use of the long-vacant commercial spaces at the tower complex — located at Nuuanu, Hotel and Bethel streets — or risk losing $7.9 million in Community Development Block Grant funds that were used for the building.

Officials said after Wednesday’s meeting that the new satellite city hall likely will move on July 1 and will take up roughly two-thirds of the first-floor commercial space.

HUD had suggested a satellite city hall as one possible use for the vacant space.

The Fort Street Business Improvement District is set to move into the old satellite city hall location once the city moves out, Pfund said. The organization is expected to pay a small monthly rent and help maintain and provide security for the areas, city officials said.

Councilwoman Carol Fukunaga, who represents the Chinatown and downtown neighborhoods, said she’s troubled that the city has “a lot of underutilized properties, particularly in downtown-Chinatown.”

Pfund said the market for office space downtown has been stagnant and the city has had difficulty finding tenants.

Also Wednesday, Parks and Recreation Director Michele Nekota told the committee that 24 new positions are being budgeted to maintain a series of parks and roads in lower Kakaako that are being transferred to the city. That many employees will allow the 41-acre area to be covered in the morning, afternoon and evening, Nekota said.

The Caldwell administration and the Hawaii Community Development Corp., the state agency that oversees Kakaako, agreed to the transfer in April because the city is better equipped to manage parks and the arrangement makes it easier for police and other city personnel to enforce sidewalk regulations and laws violated by homeless in the area.

While the city has been given the OK to enforce sidewalk regulations, the transfer won’t occur for another month or so, HCDA public information officer Garett Kamemoto told the Honolulu Star-Advertiser.

In October, a city official said about $2.9 million would be needed to properly maintain the parks and noted that HCDA is now spending $1 million annually, including $640,000 for six park maintenance contracts.

Nekota also told the committee $10 million is being earmarked for sand replenishment at Ala Moana Regional Park and $1 million for a consultant to analyze “whether we need to repair, renovate … or replace” the Koko Crater Trail.

P&R is also hiring a community forester and three nursery workers to lead an effort to plant 100,000 trees on Oahu by 2025 with the goal of increase the island’s tree canopy by 35 percent by 2035.

Enterprise Services Director Guy Kaulukukui told the committee that the city is proceeding with plans to partner with private entity that can design, build and operate an upgraded Blaisdell Center complex.

Shovels may not be in the ground for the project until at least mid-2020, however.

Kaulukukui said there are about 11 prospective partners as the city prepares to issue a formal request for proposals in October. A contract is projected to be awarded June 1, 2020, he said.

The mayor’s budget proposal calls for $24.3 million to go toward Blaisdell redevelopment and Councilman Mike Formby noted that the listing’s description included “demolition.” Kaulukukui said no demolition would occur until after a private partner has signed on.

It’s important for the money to be earmarked in the coming 2020 budget, which begins July 1, “to continue to show (prospective partners) the city’s commitment to the process,” he said.

Under a private partnership, the partner would take over the construction and then maintenance of the complex, taking on its risks in exchange for negotiated “availability payments” from the city. Such a plan would shift the business risks of the complex onto the developer, Kaulukukui said.

The draft environmental assessment of the plan released in November calls for demolition and reconstruction of the existing exhibition hall and parking complex, as well as major renovations for the arena and concert hall.