The agency responsible for planning and building Honolulu’s rail project is relying on outdated financial figures — and its latest estimates of how much over budget the project is are almost certainly too low and likely to climb, a report by the Office of the City Auditor concluded.

Further, the cash-strapped transit project lacks enough contingency dollars, and its staff lacks documentation to support some $450 million in cost increases, Auditor Edwin Young’s office revealed in the report.

The City Council formally received the audit Friday — although its critical findings weren’t a surprise because Honolulu Authority for Rapid Transportation Executive Director Dan Grabauskas spent part of Thursday afternoon at an unusual news conference where he pre-emptively bashed the report, calling it flawed and a rush job finished under pressure from the Council.

The audit, which asserted that HART could manage the $6.57 billion project more “economically, effectively and efficiently,” has only fueled more acrimony between rail leaders and the city’s top elected leaders — some of whom had already called on Grabauskas to resign.

The embattled rail executive finally responded to those calls Friday, saying he has no immediate plans to resign his post as Council Chairman Ernie Martin suggested he do last week in writing.

Instead, Grabauskas, who’s in the second year of a three-year contract and earns $299,250 a year, said he plans to take up his future at the most expensive public works project in state history with the HART board during his annual evaluation. That process will resume at a regularly scheduled meeting next week.

“This is my home. I’ve put down roots now over the last four years,” Grabauskas said Friday. “I love Hawaii. I’d like to stay here, and I’d like to see this project through.”

Martin, meanwhile, said if HART doesn’t get a better handle on the project finances, he and other Council members would consider revoting on the five-year rail tax extension they approved earlier this year. The Council approved that measure, Martin said Friday, because HART officials assured them it would be enough to complete the full project.

Revoking the tax extension could lead to a breach in the city’s funding agreement with the Federal Transit Administration and cause it to forfeit some $1.55 billion, but Martin said he “cannot believe” the FTA wouldn’t be willing to work toward a “realistic financial plan” to get the project done.

During a meeting with reporters, Martin excoriated Grabauskas for questioning Young’s integrity after previous audit draft findings had been leaked to Council members and local media.

“This is a serious matter, and this is the best he could come up with? … To attack the integrity of an audit staff who’s nationally recognized? … I was very disappointed,” Martin said Friday. “How much credibility can we give to his word?”

Mayor Kirk Caldwell, who signed the tax extension into law after the Council approved it, said in a statement Friday that he “will take (his) time to thoroughly review (the audit’s) findings and conclusions.”

“My focus is on building this transformational project as quickly and inexpensively as possible,” Caldwell’s statement read.

Rail’s price tag has ballooned by an additional $1.3 billion in the past year and a half, and HART could do a better job of regularly updating the public and the city’s elected leaders on the climbing price tag, the city auditor’s report stated.

The report questioned HART’s $120 million estimate for utility clearances and relocation costs, saying the agency lacked the proper detail and support for that figure. Auditors similarly said they didn’t find documentation to support some $45 million in project enhancements, including public highway improvements, backup generators and fare collection.

The report went on to criticize HART for paying some $1.5 million in stipends to unsuccessful construction bidders, maintaining a vacant office space and repackaging station construction contracts without properly evaluating whether the move would actually save costs.

“We believe that HART could have taken a more proactive approach in implementing cost containment measures. Instead, HART reacted by requesting more funding,” the Auditor’s Office stated.

Grabauskas took issue with most of those findings Thursday. He said such stipends are an industry best practice, that many of HART’s employees are moving out of the agency’s Ali‘i Place headquarters and into on-site offices to prepare to operate the rail line, and HART saved some $38 million compared with the original bids by repackaging the station contracts — essentially arguing that the agency was being punished for acting to save money.

The report also criticized HART for not providing updated financial numbers on a timely basis. It in some ways reflects the frustration that some on the Council, including Budget Chairwoman Ann Kobayashi, have expressed for years, saying they’ve been unable to get clear, accurate figures from HART.

Grabauskas and other HART officials, meanwhile, have said that building in one of the nation’s most active construction markets has made cost estimates difficult, and they’ll need to get the project’s final bid proposals and resolve utility-clearance problems before they can give city leaders and the public a clearer idea of the price tag.

Grabauskas said he needed Caldwell and the Council to approve the tax extension before HART could proceed with a financial plan update. Martin scoffed at that Friday, saying HART could have started that work while it waited for the tax extension. Grabauskas said he was told to “assume nothing” and called Martin’s suggestion that they could have proceeded an “about face” from his earlier instructions.

Martin, who’s considering a run later this year against Mayor Kirk Caldwell, dismissed any political motivations behind his call for Grabauskas and former HART board Chairman Don Horner to resign.

Martin said if he wanted to play politics with the rail project he would oppose it, but he hasn’t. Martin added that most of the constituents in his district, which includes the North Shore, oppose the rail project.

City Auditor report of HART

HART Audit Response