Mayor Peter Carlisle likely will seek Honolulu City Council approval for a "contingency plan" to raise additional funding for the rail project if that becomes necessary.
Carlisle spoke with reporters in Honolulu Tuesday after meeting last week in Washington, D.C., with Federal Transit Administration Administrator Peter Rogoff to discuss funding and other requirements for Honolulu’s $5.27 billion rail transit project.
The Federal Transit Administration last month warned the city that the financial plan "must be further strengthened" before the FTA will consider awarding up to $1.55 billion to the city to help pay for the project.
The FTA asked the city to demonstrate that it has additional sources of revenue that could be tapped if there are unexpected cost increases or funding shortfalls that could jeopardize the rail project.
Carlisle said Tuesday the city’s rail funding plan is sound but that the FTA is asking for extra guarantees the city will have the money it needs to complete the project.
"They have their own methods of making sure before you get the full funding grant agreement that you have other instruments in place that will deal with any contingencies," Carlisle said of the FTA. "That’s all it is. It is just one more layer of making sure that we are 100 percent capable of doing this project."
Carlisle referred specific questions about the city’s strategy for satisfying the FTA to Donald Horner, Finance Committee chairman for the Honolulu Authority for Rapid Transportation.
Carlisle said Horner has a better grasp of the technical details, and said Horner and Rogoff "decided to get together and talk with each other to try and figure out just what exactly we could do, that if the moon fell into the ocean, we could still complete the project."
Horner was not immediately available for comment.
One tactic for raising extra money to deal with any unexpected contingencies would be to extend the half-percent excise tax surcharge, which is the primary source of funding for the rail project.
The excise tax surcharge on Oahu residents and visitors is expected to raise $3.154 billion to help pay for rail and is scheduled to end on Dec. 31, 2022.
The city notes in its rail financial plan that extending the half-percent surcharge by two additional years would raise an extra $740 million to help pay for the rail project.
Carlisle specifically cited that portion of the rail financial plan to reporters and confirmed that an excise tax extension is "a possibility, and it’s only under the worst set of circumstances."
"We are now to the point where all of the contingencies have been essentially dealt with," Carlisle said. "You have to understand, a lot of this is to my mind pretty much kabuki theater because we’re already at the point where if under the worst circumstances it ended up costing us much more than they thought it would, it would take exactly five more quarters of the GET to be able to take care of that, which is already written into the program."
But Carlisle said he does not plan to request an excise tax surcharge extension from the state Legislature this year.
City Council Chairman Ernie Martin said he does not expect the Carlisle administration to ask for an extension of the excise tax, which would be a tough sell at the City Council or at the state Legislature.
"I would be very shocked if I see any reference to a GET surcharge extension," he said. But Martin said he does expect to hear one or more proposals this year that would provide the "additional guarantees" that the FTA is seeking.
Martin said he expects to hear the details of the administration contingency proposals during the annual city budget debate that begins in March.
