Honolulu Authority Requests $1.55 Billion for Rail Project

Honolulu Authority Requests $1.55 Billion for Rail Project
July 17, 2012

Malia Zimmerman

Malia Zimmerman is president and editor of Hawaii Reporter. (read full bio)

Calling it “a great milestone,” Honolulu Authority for Rapid Transportation CEO Dan Grabauskas has submitted a Full Funding Grant Agreement to the Federal Transit Administration requesting $1.55 billion for Honolulu’s 20-mile elevated steel on steel rail project.

This is the first step toward getting funding for the $5 billion project that U.S. Senator Daniel Inouye (D) pledged to help secure as Senate Appropriations Chairman.

Grabauskas says he is confident the city will win White House approval and Congress will authorize the full amount of the request.

"The U.S. Congress has never reneged, never ever not delivered on a Full Funding Grant Agreement ever. Period. I'll even go a step further and say I don't know of any project that has gotten this far to actually have the FTA say submit these documents that didn't get the award either,” Grabauskas said.

Grabauskas dismissed a recent dispute in Congress in which House Republicans in a subcommittee of Appropriations cut one of Hawaii’s first allocations for its rail project from $250 million to $100 million. The House is still in negotiations with the Senate on the final allocation amount, which comes from New Starts funding.

Stronger City Plan

After considerable criticism from City Council members about the rail financing plan’s viability, Grabauskas said the city’s financial plan is now “very strong.”

City Council Budget Chair Ann Kobayashi and City Council Member Tom Berg did not approve of HART’s plan to borrow up to $1.9 billion in city Capital Improvement Project funds, use as much as $450 million in commercial papers, and add another $244 million from the Bus and Handivan maintenance and repair fund to finance the 20-mile system.

Grabauskas said the total cost of the project has dropped by $10 million and up to $214 million from the Bus and Handivan fund could be used instead of the original plan for $244 million.

The FTA’s analysts claim the city will have $193 million left over at the end of construction of the rail project because the federal agency is projecting an increase of $144 million in general excise and use tax revenues on Oahu, a half percent of which goes to rail.

Pledge to be Debt-Free

But Grabauskas could not guarantee that if the rail ever gets built, it will be without cost overruns. He did pledge the city would be debt-free from the rail project three years after its completion.

The FTA, which helped the city write the financial plan for the rail, did increase the cost of what the city will likely need to spend on maintenance and operations. Grabauskas said he believes the costs are too high, but will address that with the FTA at a later date.

There are still federal and state legal challenges in the works that could derail the project.

In addition, if former Gov. Benjamin Cayetano wins the mayor’s election this August or November, he has promised to kill the project. If any mayoral candidate receivens more than 50 percent of the vote in the primary election August 11, he wins. If no candidate tops 50 percent, the top two finishers continue on to the general election in November.

And what if Republicans take control of the U.S. Senate this November and Inouye is replaced as Appropriations chairman? Will that impact funding and if so, what will HART do then?

Grabauskas would not discuss whether he has a backup plan if any of these threats to the project come to fruition.

Risks to Project

Honolulu Transportation Expert Cliff Slater, who founded HonoluluTraffic.com, questions whether House Republicans will allocate $1.55 billion for a project that has lost public support and could be killed in a matter of weeks through court action or the election.

Slater was also critical of HART’s financial plan, saying even if the city reduces the amount of the raid on the Bus and Handivan fund from $244 million to $214 million, that is an amount that will still come out of the City's General Fund.

He also took notice that instead of increasing the cost of the project, which was an option, HART instead chose to reduce the contingency amount.

Slater also said the operating subsidy for transit has been increased by $600 million over the next 18 years to a total of $6 billion.

Malia Zimmerman (Malia@hawaiireporter.com) is president and editor of Hawaii Reporter Inc., an independent online news journal, where an earlier version of this article appeared. Used with permission.

Malia Zimmerman

Malia Zimmerman is president and editor of Hawaii Reporter. (read full bio)