Inside ‘frenzied’ push to shorten rail and retain federal funding

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Neither the council that oversees rail nor the public have seen the latest so-called ‘stimulus package’ – another attempt by local transit officials to lay out a plausible path for a megaproject that has once again overtaken the budget.

Honolulu Rapid Transit Authority executive director Lori Kahikina said at a meeting last week that her staff were working “frenziedly” to get it done by Federal Transit’s June 30 deadline. Administration.

That didn’t stop HART board members from voting in favor of the consequential plan they haven’t seen yet, so they can get it to city council in time to make the deadline for the the.

On Friday, the board approved a resolution that backs the recovery plan “as we understand it” — that’s how chair Colleen Hanabusa phrased it — based on details she and a group Restricted three other members have learned from HART staff lately. month.

Construction of the guideway and railway stations has reached Middle Street. HART hopes to change its agreement with the FTA so that it only needs to build to Kakaako to receive federal funding. Cory Lum/Civil Beat/2022

“We’re really strapped for resources,” Hanabusa said of the severe time constraints to hold multiple board and council-level votes and then send the recovery plan to the FTA. “We knew we would be tight, but we didn’t expect to be in this position.

“We had to pull the trigger to give everyone an idea of ​​what we know today.”

The board then discussed at length some of the financial assumptions that should be included.

Yet Natalie Iwasa, an MP appointed to the board, called it “worrying” that no one has seen the plan yet. She expects the report to be lengthy. Iwasa further expressed concern that the board has not received one of its standard financial updates from HART for about eight months. He received a special update in December on overall cost and schedule estimates, which was largely done by outside consultants.

The stimulus plan will be made available to the board and the public on Friday, according to an agency spokesperson.

Once it’s done, it will be at least the third such a plan produced by HART since 2016 amid repeated rail budget issues and construction setbacks.

Unlike previous versions, however, this one is expected to seek FTA approval for major changes to the project’s scope and its decade-old $1.55 billion federal funding agreement.

The city agreed in 2012 to build railroads to Ala Moana, but since then the costs have more than doubled. Currently, the construction effort is expected to bring in about $10 billion in total through its various tax sources. But HART now estimates it will cost more than $11 billion to reach the Ala Moana Center as planned.

City leaders, including Honolulu Mayor Rick Blangiardi, said that through the new stimulus package, they would pursue a revised agreement with the FTA. This would allow them to build the railway line only up to the Ka’akaukukui or the “Civic Center” station in Kakaako – which is over a mile from Ala Moana – and still has access to the remaining $744 million that the federal government has agreed to invest.

The FTA has withheld those dollars for the past seven years, demanding that HART and the city present a viable plan that still carries rail to Ala Moana.

In December, however, FTA Regional Administrator Ray Tellis sent Kahikina a letter stating that he understood HART was considering a shorter rail line. His agency “stands ready to engage in further discussions” as the city “evaluates alternatives,” Tellis wrote.

During testimony before City Council earlier this month, Kahikina said Tellis’ letter was “unsolicited”, suggesting FTA took it upon itself to come up with a different scope and alternatives for the rail.

A subtle change in messaging

Meanwhile, some rail executives have in recent weeks pushed back against the idea that they were in any way halting rail construction at Kakaako and pushing the rest of the line into a potential future phase.

Instead, they say, they remain fully committed to reaching Ala Moana. They are just presenting what they call a “truncated project scope” to the FTA in order to secure the rail’s remaining federal dollars.

Then, they say, they will continue to build toward Ala Moana using only local tax revenue, with no help from the federal government.

However, it is not yet clear what the funding scheme for this would be.

Acting HART Director Lori Kahikina listens as Mayor Blangiardi conducts his State of Honolulu Q&A post address with the media.
HART executive director Lori Kahikina insists the city has always been committed to the rail reaching Ala Moana and that the plans they put forward to shorten the line only apply to the city’s funding agreement with the FTA. Cory Lum/Civil Beat/2021

“I can’t stress this enough,” Kahikina told city council earlier this month. “Right now, it’s just the contractual part that we’re talking about with the federal government. So we’re still coming to Ala Moana – we’re just temporarily truncating the project at the Civic Center.

This is somewhat different from the more gradual approach described by Blangiardi in March.

Immediately after his State of the City address, Blangiardi said, “This is the first phase of a project about what this city can afford to pay right now. The future belongs to the next phase. If you look at these megaprojects… they happen in phases. We hope for a better day in the next phase.

“We will build what we can afford to build.”

However, Hanabusa said Friday that HART’s latest budget forecast was very conservative and cautious. The revenue currently available for the rail will likely bring it closer to the mall than currently expected, if not all the way, she added.

“That’s why the board feels so strongly…you know, we’ll get to Ala Moana,” Hanabusa said at the last board meeting. “We are very confident that we will get to Ala Moana.”

HART Board Nominee Colleen Hanabusa answers questions from the media.
HART Board Chair Colleen Hanabusa said she believes the rail project has promising financial prospects, despite its many historical issues and the difficult construction phase ahead. Cory Lum/Civil Beat/2021

Hanabusa pointed to a handful of factors explaining his optimism. First, she said she thinks the project’s current $800 million contingency is too high given the state of construction and how close HART is to finally solving its problems. crippling relocation of utilities along Dillingham Boulevard.

She also said she believed HART was using low conservative projections for annual growth in general excise tax revenue – by far the largest source of rail funding – and high conservative projections on the cost of borrows money for the project when needed.

HART could reduce its current estimate of $745 million in funding costs by about $200 million, according to Hanabusa and the select group of board members who studied the matter.

In addition, Hanabusa pointed to nearly $240 million in so-called “bond premium proceeds,” or the extra amount bond buyers pay to buy Honolulu city bonds because they are considered as a relatively safe investment. It is unclear why these products were not previously listed as a source of revenue for rail.

Still, railroad officials in earlier phases of construction provided optimistic projections to see the project run into cost increases and construction setbacks. HART has already seen two of its executive directors fired from the project and suffered massive staff turnover.

The Honolulu rail could face more potential budget challenges in the future due to inflation and uncertainty related to Russia’s invasion of Ukraine, project officials acknowledge.

Additionally, officials say the toughest stretch of construction still lies ahead in Honolulu’s crowded urban core.

“We all know that this last segment has the most complexity, the most impact, the most cost and the most risk of all the segments,” said Michele Chun Brunngraber, another appointee to the board of the company, on Friday. administration.

Iwasa said she supports stopping the rail line well below Kakaako at Lagoon Drive, but the city will likely find a way to bring the system to Ala Moana.

“Rail has a kind of life of its own. It doesn’t matter what happens,” she said during a session of Civil Beat’s “IDEAS Live” on Monday. “One way or another it will continue to work. I think we could go to Ala Moana… I wouldn’t be surprised if we did.

Read Tellis’ December letter to HART and Kahikina here:

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