The City Council appears ready to give final approval today to an additional $450 million line of credit for the $5.27 million Oahu rail project, despite no clear answers on how the loan would be repaid.
Through the hearings, the Council majority has let the transit authority and city administration slide on dubious assurances that the money will never be spent.
That’s exactly the kind of fiscal tap-dancing that has Hawaii’s biggest public works project fighting for its life in this year’s election.
The Honolulu Authority for Rapid Transportation sought the $450 credit line because the Federal Transit Administration demanded it to shore up Honolulu’s bid for $1.55 billion in federal funding.
Despite obvious federal concerns that the half-cent excise tax surcharge won’t be enough to pay for rail, officials wax poetic in claiming the loan isn’t really needed.
Mayor Peter Carlisle said the city wouldn’t tap the money unless the moon fell into the ocean.
Transit CEO Daniel Grabauskas called it "an additional contingency upon a contingency."
Council Transportation Chairman Breene Harimoto got in on the amateur Shakespeare festival by describing the $450 million as "a cushion upon a cushion upon a cushion."
But all that glitters is not gold. None of the above agreed to Councilwoman Ann Kobayashi’s proposal to specify that the money couldn’t be used until the moon fell into the ocean.
Officials duck behind their claim that the loan isn’t needed to sidestep questions about how it would be repaid.
Grabauskas vaguely offered that repayment would come from the fare box, advertising revenue or renting rail space to businesses.
The fare box will cover only 40 percent of rail’s operating costs, so any fare revenue diverted to loan repayment would have to be made up with general funds from property taxes.
If there were $450 million out there in advertising and rental revenue, it would have been included in the financial plan long ago.
Even Council Chairman Ernie Martin, a key administration ally on rail, urged the city to be "just admit it, there is a possibility" that property taxes could be needed to cover the line of credit.
The city lacks credibility in promising that rail will be fully paid by the current excise tax surcharge and federal funds.
For that to happen, everything would have to go perfectly — taxes coming in on schedule, full federal funding, no cost overruns or surprises on issues like burials.
When’s the last time everything went perfectly on so massive a government project?
Voters worry that escalating rail costs could cripple Oahu’s ability to address other pressing needs, such as crumbling roads and sewers.
If rail is voted down because city leaders wouldn’t be honest about the financing, they’ll have nobody to blame but themselves.
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Reach David Shapiro at volcanicash@gmail.com or blog.volcanicash.net.
