A bill to make a city-backed $450 million line of credit available to bolster the finances of the Honolulu rail project won the approval of a City Council committee Wednesday and is poised for final Council approval next month.
Mayor Peter Carlisle announced in January that his administration would make the line of credit available to the Honolulu Authority for Rapid Transportation to demonstrate to federal authorities the $5.27 billion rail project has the resources it needs to complete construction.
HART Executive Director Daniel Grabauskas told the Council Legislative Matters Committee on Wednesday that the rail financial plan is sound, but said the Federal Transit Administration requires that the Honolulu rail project have the extra line of credit available just in case something goes wrong.
"If at some point there is some dramatic, unexpected, unforseen circumstance, they would like to see the City and County of Honolulu has the commitment that they would complete the project, and what we need to demonstrate in this is that we have ready access to some funding to do that," Grabauskas told the Council.
The rail financial plan would use federal funds and the proceeds from the half-percent state general excise tax surcharge imposed on Oahu residents to pay the full cost of construction of the rail project by 2022.
The proposed city-backed $450 million line of credit is separate from that rail financial plan, and it isn’t clear how HART would repay that money if it must tap the line of credit to finish rail construction.
Council Budget Committee Chairwoman Ann Kobayashi asked Wednesday whether the city might be required to raise property taxes someday to repay the $450 million if HART cannot cover the debt.
"We’re looking to certainly not ever get there," said Michael Hansen, director of the city Department of Budget and Fiscal Services.
Council Chairman Ernie Martin then remarked that winning final approval of the bill on June 6 would be easier if the administration were "more forthright" in its testimony about the bill, including the potential for a property tax increase in connection with the line of credit.
"We basically might as well just admit it, there is a possibility," Martin said.
