A City Council committee gave preliminary approval Monday to a bill that would make it easier for transit officials to tap up to $450 million via low-interest city loans, but not before several Council members demanded more details.
Bill 37 would authorize the city administration to borrow money for the $5.27 billion rail project using commercial paper, or short-term debt sold on financial markets.
The Council’s new Legislative Matters Committee, made up of all nine Council members and led by Council Chairman Ernie Martin, voted 7-2 to advance the bill. Members Tom Berg and Ann Kobayashi voted no, while Romy Cachola and Tulsi Gabbard voted for approval but with strong reservations.
The bill now moves to the second of three required votes before the full Council. The first vote Wednesday was also 7-2.
Dan Grabauskas, executive director of the Honolulu Authority for Rapid Transit, said the Federal Transit Administration told HART in December that it would not agree to commit $1.55 billion in federal funds for the project unless the city could offer more assurances that it would carry through with the project even if "unexpected events such as cost increases or funding shortfalls occur," in the FTA’s words.
But Council members said what they see as a sudden need by federal transit officials to get further assurances from the city raises questions about the project’s viability and the federal commitment to the project.
"We had been told time and time again about the strength of the financial plan, and yet now I was surprised to hear about this additional requirement by the FTA, which goes to making the implication that maybe the financial plan is, in fact, not that strong," Gabbard said. "I think you’re seeing a lot of the hesitation, a lot of the grave concern here, coming from changing expectations."
Cachola said of the FTA request, "If our financial plan is strong, why are they requiring us to do this?"
Grabauskas, however, said the requirement for "an additional contingency upon a contingency" is a commitment required not just of the Honolulu project, but of all municipal projects the federal agency is assisting.
Kobayashi tried unsuccessfully to change the bill to reduce the amount that could be tapped by HART to $100 million unless there is a catastrophic event.
"The reason for the amendment is I can’t trust the people who have been working on this project," Kobayashi said. "Before we borrow money, we should know how we’re going to pay it back."
The version of the bill approved Monday includes amendments initiated by Councilman Ikaika Anderson that require approval by two-thirds of the Council, instead of the usual majority vote, before any bonds could be issued. It also requires, before such funds could be used, that the FTA commit its share of funding and that HART spell out specifically how it intends to pay back the city before the Council approves the issuance of bonds.
Grabauskas told Council members that FTA officials have indicated they can live with the conditions proposed by Anderson but expressed "concerns" about those offered by Kobayashi.
