Mayor calls report an ‘appalling waste’

A state report predicting $1.7 billion in added costs for the city’s proposed $5.5 billion rail transit system is biased and used erroneous research to reach its conclusions, Mayor Peter Carlisle said yesterday in blasting the report released in the final days of Gov. Linda Lingle’s administration.

Carlisle called the report an "appalling waste" of taxpayer dollars.

He said the report, released Thursday by the state Department of Transportation, used flawed assumptions about the state’s economic growth and potential ridership for the 20-mile train. He also called the report biased, noting that one of the authors is a known opponent of rail.

"Therefore, it is no surprise the report is a predetermined, anti-rail rant," Carlisle said at a news conference in his office.

"The second it was seen, red flags went off all around town," he added. "That’s why we’re here suggesting that there may be a serious flaw with the methodology and the people involved with creating this document."

Carlisle’s predecessor, Mufi Hannemann, said he read the report and reached the same conclusion. Both Hannemann and Carlisle said they felt the report reached a "predetermined" conclusion.

"They had a predetermined mindset that they wanted to come up with — that this project is going to bankrupt the city of Honolulu and the state of Hawaii," Hannemann said. "So they looked at the most pessimistic, weakest scenarios to come up with their conclusions.

"To me that’s not being balanced."

Interim Transportation Director Mike Formby did not return telephone messages seeking comment yesterday.

Lingle administration officials have not commented on the report. Many spent yesterday cleaning out offices as they prepare for the swearing-in of Gov.-elect Neil Abercrombie on Monday.

The rail report was released late Thursday afternoon with copies transmitted to Carlisle, Abercrombie, City Council Chairman Nestor Garcia, the Federal Transit Administration and U.S. Secretary of Transportation Ray LaHood.

"I am confident these officials will appreciate the need to fairly assess the economic impact of this proposed rail project on Hawaii taxpayers today and for generations to come," Lingle said in a news release.

Lingle ordered an independent financial analysis by the state — which is not part of the official federal approval process — last spring to determine whether the rail project was feasible given the state’s economic struggles. She said she wanted an objective assessment because the project is being financed by Oahu taxpayers as well as the federal government.

The report was prepared by Infrastructure Management Group Inc. and CB Richard Ellis, and claims it "goes substantially beyond" the periodic reviews undertaken by the FTA.

One of the authors of the report was Thomas A. Rubin, a rail opponent from Oakland, Calif., who has delivered speeches and written various pieces outlining problems with rail projects in other cities.

Among the key points, the IMG report predicts the project is "likely" to face cost overruns of more than $1.7 billion — a figure that could balloon to $4.5 billion — and that ridership is expected to be "substantially lower" than currently forecast.

The IMG report predicts the city’s funds from the 0.5 percent general excise tax surcharge on Oahu will not generate the money needed for the project. It assumes a 4 percent growth rate in GET revenues compared with the 5.4 percent used in the project’s forecast, based on the projected growth rate in the U.S. gross domestic product over the next decade.

"The prediction that there will be less money raised from the GET tax is wrong," Carlisle said. "In fact, right now in Honolulu the GET revenues is 99 percent on track."

Hannemann said the IMG report’s assumption "shows a lack of understanding of Hawaii’s economy and just poor analysis."

The report also predicts ridership will be "substantially lower" than current projections, which "would require an unprecedented and unrealistic growth" in use of public transit for a city that already has one of the highest public transit user rates in the country.

Carlisle again called the report’s assumption erroneous.

"Model forecasting indicates that the more people who ride the TheBus, the more people will ride rail," he said.

Hannemann, who spearheaded the project during his six years as mayor, reached many of the same conclusions as Carlisle. He has consistently said the rail project was among the most scrutinized in the country, noting that federal transit officials and independent audits commissioned by the Federal Transit Administration all gave the project high marks.

"I trust the FTA’s independent financial audits a lot more than this report, that was very skewed and biased because of the governor’s own particular feeling about rail," he said. "She has never been a supporter of the project, so it’s not surprising to me that she would come out with a report like this before she leaves office."

Hannemann added he did not expect the report to delay the rail project.

Carlisle said he planned to meet soon with Abercrombie to discuss the plans for moving forward with the rail project. Abercrombie was scheduled to return to Hawaii yesterday after attending a meeting of the Democratic Governors Association in Washington, D.C.

Abercrombie has said the financial analysis would have no bearing on his decision to approve the final environmental impact statement, which is required for federal approval and is still being reviewed by the state Office of Environmental Quality. Abercrombie said he will look only to determine that the EIS was conducted properly.