Feds tell HART to find extra $134 million for Honolulu rail

Honolulu must increase the official price tag for construction of the 20-mile rail project by another $134 million for the Federal Transit Administration to be satisfied that the city has enough money to complete the project, according to Honolulu Authority for Rapid Transportation Executive Director Andrew Robbins.

That will bring the cost of construction for the project to $8.299 billion, up from the previous cost of $8.165 billion, Robbins said, which works out to an increase of about 1.6 percent. That does not include financing costs, which are expected to increase the total cost of the project to more than $9 billion.

Robbins met with acting FTA Administrator K. Jane Williams in Nashville, Tenn., on Monday to discuss the Honolulu project. “I explained to them that we don’t believe that we need the $134 million, but in our discussion it was clear that the FTA still wants us to account for that in the revised financial plan,” Robbins said.

“For FTA purposes, we have to show the budget at $8.299 (billion), but I want to make it clear that we have not changed our budget of $8.165 (billion), we’re still performing to that,” Robbins said.

The city pledged in 2012 to complete rail’s elevated guideway and 21 stations for $5.26 billion, but estimates of the construction and financing costs for the project have soared in recent years. The project was supposed to be completed in 2019 but federal officials now believe it will not be finished until September 2026.

The FTA is withholding about $745 million in federal funding for the rail project until HART provides an acceptable “recovery plan” that demonstrates how the city will complete the project and where the money will come from. The FTA wants HART to submit that recovery plan by Nov. 21.

The FTA concluded during a risk analysis in June that the extra $134 million would be required to complete the project, and it isn’t clear yet where that extra money will come from.

Honolulu Mayor Kirk Caldwell has said the city should not have to pay that extra cost and HART should cut expenses or find some other way to satisfy the FTA.

The FTA wants to see a revised financial plan for the rail project in the next 60 days, and “we’re going to look at our funding sources, see how they’re performing,” Robbins said. “I think we’ll have to show sources of funds that include the $134 million.”

However, he stressed that HART does not believe the money will be needed, adding, “You cannot draw the conclusion that we automatically need $134 million from the city, and the mayor’s position is quite clear.”

Robbins said he assured the on Monday that Honolulu will be able to meet all of the requirements set out in the FTA’s Sept. 21 letter that essentially demanded that the Honolulu City Council commit $44 million in city funds within the next 60 days to help finance rail construction.

That $44 million would be the first city funds committed to rail construction. Up to this point, construction has been financed with federal funds, the half-percent excise tax surcharge imposed on Oahu residents and proceeds from a state hotel room tax increase that took effect this year.

Robbins said City Council Chairman Ernie Martin indicated the Council “will take the necessary steps” to provide that money to HART, and Robbins passed that information along to the FTA.

The FTA is also requiring that the rail authority decide within the next month how it will build the last city center segment of the project.

Robbins said he told the FTA that he expects the HART board will commit on Thursday to using a public-private partnership approach to award a contract to complete the final segment of the project from Middle Street to Ala Moana Center.