HART moving toward public-private partnership

The Honolulu Authority for Rapid Transportation is inching closer toward finding a private partner to help complete the $8.165 billion rail project despite lingering reservations by some HART board members.

The Honolulu City Council Budget Committee is slated to take up Resolution 18-139, which throws the Council’s support behind the idea, at its 9 a.m. meeting today.

HART consultant Ernst &Young Infrastructure Advisors released a study last month that concluded it would be beneficial for the agency to finish the last 4.1 miles of the guideway and eight stations with a private partner under a design- build-finance-operate-maintain (DBFOM), or P3, model.

The work also would include construction of the Pearl Highlands Garage and Transit Center as well as long-term operations and maintenance once the line is up and running. Projections now call for interim service by December 2020 and full service by December 2025.

Until now, contracts for the 20-mile, East Kapolei- to-Ala Moana Center project have been awarded through a design-build process.

After several months of discussion, the HART board is now expected to decide on giving HART Executive Director Andrew Robbins the OK to solicit proposals for the P3 plan at its next meeting on July 19.

Under a proposed HART staff timeline, contractors would be solicited in August with a list of qualifying prospective partners selected in October. A formal request for proposals would then be issued in late November with an award issued about a year from then.

Proponents of a P3 model argue that such an arrangement would cap the city’s share for the project at $8.165 billion and transfer the risk of additional costs to a private partner. Because the partner has a long-term stake, it would be more likely to have fiscal and schedule discipline and employ a more active maintenance and equipment program, supporters believe.

Robbins told board members at a meeting Thursday that obtaining a partner who will design, build, finance, operate and maintain is “the global best practice in my mind today.”

HART has heard from at least four teams that are preparing proposals for a DBFOM contract, he said. “There may be more.”

A P3 relationship makes sense for the major contractors because “what they get in exchange is a long-term, constant revenue stream so long as they perform,” Robbins said. From the city perspective, “this provides the cost certainty and the schedule certainty we’re looking for.”

Any agreement involving operations and maintenance would need to involve the city Department of Transportation Services. Under a 2016 City Charter amendment approved by Oahu voters, the responsibility for O&M for a multimodal system consisting of TheBus, paratransit and rail falls under DTS.

Several board members at last week’s meeting voiced concerns about a potential move toward a public-private partnership.

“I’m concerned about the time and effort being put into P3 because it feels like the focus is entirely there and not on the (design build model),” said board member Tobias Martyn, adding that he’s worried that it could lead to increased costs or further delays.

Robbins said the work needed for a design build model is incorporated into the P3 work. “Either way, we’ll be ready with those documents.”

Martyn shot back, “I’m very skeptical. It just feels like organizationally more effort is being put into DBFOM than it is to completing this project in general on time and on budget. I just feel like there’s not enough attention being paid … to completing this project if DBFOM does not occur.”

Board member Ember Shinn said while she’s “very friendly” about a DBFOM model, she wants a better explanation of the financing scenario laid out by Robbins. “I’m not convinced that the cost savings you referred to based upon other projects would necessarily apply to our case because we’re not doing it as the whole, 20-mile project.”

Robbins said a DBFOM model could lead to a proposal that shows the project being completed earlier. “We’re hearing this from the companies themselves,” he said.

Board Vice Chairman Terrence Lee said he generally believes private companies can do some things better than government “because the private sector is driven by a competitive set of circumstances that forces them to be more efficient.”

If the P3 model were more established and embraced by the city when the project first began, “maybe we wouldn’t be here where we are today with a lot of somber faces,” Lee said. “The question is whether do we look at P3 today.”

Lee said he pushed for P3 when he first got on the HART board in July 2015 but was told by staff “it was too late, we should have done it from the beginning.”

Retired University of Hawaii law professor Randall Roth, a longtime rail critic, said it makes sense for HART to be looking at public-private partnerships. A bigger priority is to decide whether to move the project beyond a Middle Street stop at all, he said.

“If you plow past Middle Street, you’re going to find yourself in a position where there simply isn’t enough money in the world to keep it going,” Roth said.

Officials from several labor unions said they backed the public-private partnership concept.