Honolulu Mayor Kirk Caldwell on Monday urged the Honolulu City Council to move quickly to approve a bill that would extend the 0.5 percent surcharge on the general excise tax after he made public a recent letter from a top federal transit official threatening to cut off funding for the city’s $6.57 billion rail project.
In the letter, acting Federal Transit Administrator Therese McMillan stated, “We recognize the challenges the project is now confronting, but FTA must be assured of the commitment of the revenue needed for the project before we can move forward together.”
The Council Budget Committee is expected to take a vote Wednesday on Bill 23, extending the tax surcharge by five years through Dec. 31, 2027. Council Budget Chairwoman Ann Kobayashi said the measure, if it moves out Wednesday, would then go to the full Council in December for the second of three required votes and then move back to the Budget Committee. A final vote, under that schedule, would be taken in January.
Honolulu Authority for Rapid Transportation officials say the additional money is critical to complete the 20-mile, 21-station project as planned.
The extension is projected to bring in an additional $1.2 billion to $1.8 billion, assuming a growth rate of between 3 and 5 percent. A recent “refresh” plan by HART assumes the five additional years will bring in $1.5 billion based on a 4 percent growth rate.
Council members, in response to the FTA letter, said the information is nothing new and that they are proceeding with the timeline as scheduled.
The McMillan letter is dated Thursday, the same day Caldwell met with McMillan and other federal transit officials for about an hour to discuss the project’s future.
The FTA promised $1.55 billion for the project under a full funding grant agreement with the city. But McMillan, in her letter, said the FTA cannot award the next segment of funds, $250 million expected in November, until her agency has approved a revised cost estimate and schedule, and a financial plan that includes a commitment of all local funds needed to cover the cost of that revised estimate.
HART’s revised plan is expected to give a cost estimate showing an increase to $6.57 billion from $5.26 billion and a pushing back of the project completion date until the end of 2021, a year later than anticipated.
Caldwell said the five-year extension should be passed with no “artificial caps” for rail, such as the $910 million ceiling limit suggested by Council Chairman Ernie Martin.
Martin, in a prepared statement Monday, said the Council still supports the project but that “it would be remiss in its duties if it did not get answers to critical questions surrounding the project.”
Martin criticized Caldwell and HART officials for expecting that the Council would offer “nothing more than a rubber stamp of a seriously flawed and mismanaged plan.”
Construction costs do not factor in a number of costs, such as the relocation of existing power lines, while HART has yet to produce a “reliable projection” for the cost of operations and maintenance, he said.
Councilman Ikaika Anderson said McMillan’s letter reaffirms what he learned when he met with the FTA chief in Washington on Oct. 23.
Anderson said McMillan warned him that the grant agreement is a legal contract and that canceling the project now would likely require the city to reimburse the FTA $450 million, cancel some $1 billion in committed contracts and pay for demolition and deconstruction.
“That’s at least $1.5 billion that real property taxes would have to pay for,” he said, emphasizing that he would not vote to increase property taxes.
Council Transportation Chairman Joey Manahan voiced displeasure that Council members did not learn the details of Caldwell’s visit with McMillan directly, but through a news release.
“The way I see it, we’re all partners in the federal grant agreement,” Manahan said.
In related news, Caldwell confirmed that he used his own credit card to pay for the trip to Washington because his mayoral re-election campaign committee held a fundraiser at a ritzy Georgetown hotel which he attended.
Caldwell told the Honolulu Star-Advertiser he will submit receipts for the airfare and hotel room in Washington to his campaign so he can be reimbursed.
He said both he and his wife spent several years working in the nation’s capital and still have many friends and connections there.
Campaign Manager Lex Smith said not all of the costs will be picked up by the campaign because the mayor spent some personal time in the Midwest with his family. Caldwell will pay for that segment out of his own pocket, but nothing would come from city coffers, Smith said.
A fundraiser report, which is required to be submitted to the state Campaign Spending Commission prior to an event, listed the fundraiser took place Thursday night at the Fairmont Washington, about 1.5 miles from the White House.
The notice said the suggested contribution was between $500 and $4,000 a person. It listed the person in charge as prominent Honolulu attorney Mitchell Imanaka, a longtime Caldwell supporter.
