David Shapiro: Oahu rail careens toward yet another fiscal train wreck

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Taxpayers face more potentially ruinous hits from the city’s rail debacle if the Honolulu Authority for Rapid Transportation is allowed to sign a massive contract to finish the final 4 miles to Ala Moana Center without full public vetting.

HART has received at least two proposals for a public-private partnership to complete the last construction on the $9.2 billion project as well as operate the system for 30 years.

HART has refused to identify potential partners and said it won’t reveal terms of the deal until the contract is awarded late this month, claiming dubiously that state procurement laws prohibit any disclosure.

The city and its rail agency have made one dumb mistake after another in running the cost of Hawaii’s largest public works project ever to nearly twice its original budget, with completion six years behind schedule.

The proposed P3 is the biggest single rail contract, entailing $1.4 billion to build guideway and stations through the city center and a parking structure at Pearl Highlands, plus operating costs that could exceed $4 billion over 30 years.

If Mayor Kirk Caldwell and the City Council allow HART to sign this contract and obligate these funds without thorough public review, it’ll be the most egregious negligence yet in their shoddy oversight of this project — especially with current economic instability.

The $1.4 billion construction component of the partnership pushes HART to the limits of its $9.2 billion funding, and the Legislature has said the state, which faces a $2.3 billion COVID-related budget deficit, will provide no more.

HART Chief Financial Officer Ruth Lohr has projected excise tax and hotel room tax collections for rail will be $450 million short because of the COVID recession, which means in practical terms that HART will have only $950 million of the $1.4 billion funding for the construction piece of the P3.

Lohr has said HART’s cash flow will run dry by year’s end if the Federal Transit Administration doesn’t start releasing $744 million in federal funding withheld because of rail’s troubles, which FTA has not committed to do.

The city has no clear funding source for annual rail operations, which have been estimated at $71 million when service to Aloha Stadium begins next year, $137 million when full service to Ala Moana Center starts in 2026 and $169 million by 2036.

Raising this money could become even more challenging if COVID deficits persist, ridership is short or P3 bidders inflate the operations component to make up for likely construction overruns.

With so many uncertainties, allowing those who have repeatedly proved themselves untrustworthy to execute a contract of this magnitude and complexity, based on deliberations kept secret from a public with so much to lose, would elevate the incompetence displayed in carrying out this project to willful dereliction.

Reach David Shapiro at [email protected]


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