A financial review of the city's project may not be done before the governor leaves office in December
POSTED: 1:30 a.m. HST, Aug 26, 2010
LAST UPDATED: 2:19 a.m. HST, Aug 26, 2010
It's looking more likely Gov. Linda Lingle will run out of time before deciding whether to approve the city's planned $5.5 billion elevated commuter rail project.
The governor must sign off on the project before construction can begin. She leaves office Dec. 6 and is waiting for a financial review that has yet to begin and could take three months to complete.
"So this is not going to happen any time soon and perhaps not even while my term in office is still going on," Lingle said yesterday after Sen. Daniel Inouye begged her to authorize the plan.
Inouye said the state could lose a promised $1.55 billion in federal funds if construction doesn't begin soon on the 20-mile, east Kapolei to Ala Moana elevated rail line.
"The finances are in line and my concern is, seriously, the $1.55 billion is not really in the bank unless we use it as soon as possible," Inouye said. "Remember, we're still in an economic crunch and there are 49 other states with equal concerns."
"I am begging the governor, if everything is in line, please, for the sake of Hawaii, sign the paper."
Inouye spoke at a morning news conference.
Lingle, asked for her reaction at a midday event, said, "It may end up being more appropriate for the next governor to make this decision since they will really have to live with the result. We'll make certain that we've done all the due diligence ... we've done an objective financial analysis so the next person can really take a good look at it."
If Lingle doesn't make a decision before leaving office, the issue would fall to one of her three likely successors: former U.S. Rep. Neil Abercrombie, Lt. Gov. Duke Aiona or former Mayor Mufi Hannemann. All say they support mass transit, but they have differing opinions on the current plan.
Hannemann, who has said the state's financial review is not needed, would expedite rail if elected, said Carolyn Tanaka, a spokeswoman for the Hannemann campaign. Aiona campaign spokesman Travis Taylor said Aiona would wait for the state's financial review to be completed before deciding whether to approve the project. Abercrombie said yesterday he was prepared to approve the project's EIS on his first day, if all relevant standards are met.
Lingle said that, in addition to the financial review that has not been done, she cannot sign off on rail now because the project's environmental impact statement is still being reviewed by the state Office of Environmental Quality Control. That agency is reviewing whether public comments, which were to be accepted through today, are adequate, Lingle said.
In February, Lingle said the rail's financial plan was "shaky at best" and required a thorough review.
The governor set the financial review process in motion in March when the state Department of Transportation initiated a search for a consultant to analyze cost and revenue estimates. Five months later, the state has found a company to do the review but hasn't yet finalized the contract. Once it is signed, the company doing the review will have up to three months to finish the analysis.
State Transportation Director Brennon Morioka said the contract should be completed soon. The contract award was delayed by about six weeks because the state could not come to terms with the top-ranked bidder and eventually went with another company, he said. The name of the company conducting the financial review will not be released until the contract is signed.
The delay in the governor's approval means construction might not begin until December at the earliest. December would be one year later than originally scheduled. City transportation officials say a one-year delay could result in increased inflation-related costs, but should not prevent the start of limited service in 2013 as planned.
The project was already delayed by a federal review of environmental effects as well as concerns about the train's impact on runway safety zones at Honolulu Airport.
The city is trying to mitigate the effects of the delay by proceeding with preliminary engineering work, said Toru Hamayasu, deputy director of the Department of Transportation Services.
Still, delays have the potential to raise material and labor costs, Hamayasu said.
Hamayasu noted the $5.5 billion budget includes $1 billion in reserves for contingencies, which will help absorb any cost related to the delayed start.
"One of the primary reasons for including a substantial contingency in the project cost is to address delay and inflation beyond what is reasonably forecasted," Hamayasu said in an e-mail to the Star-Advertiser.
Lingle's decision to have the city's financial plan analyzed was prompted in part by a drop in the tax revenue needed to pay the city's portion of project costs.
The city has discussed using federal bus money and general fund money to cover costs associated with building rail.
The money collected from the rail tax has been falling short of original predictions in recent years due in part to the economic slowdown. During the 12 months ended in March the city nearly met a lowered target of $164 million in collections.
Through the first seven months of this year, collections were down 3.7 percent from a year ago at $89.5 million. That excludes a 10 percent administrative fee retained by the state, which is responsible for collecting the tax.
Hamayasu noted that collections have been highly volatile, making them difficult to predict. The city is closely monitoring them and is in the process of obtaining an independent collection forecast, he said.
The project's current forecast was conducted by rail contractor Parsons Brinckerhoff. Both the Federal Transit Administration and Lingle have requested that forecasts be conducted by an independent party.