Statistical models done by the firm tasked with management oversight of Honolulu’s rail project show that a 20-mile line from East Kapolei to Ala Moana could cost as much as $10.79 billion, significantly more than the $8 billion figure that federal and city officials have been using in recent weeks.
And while the Federal Transit Administration is adamant that the $10.79 billion is simply part of its statistical financial risk analysis, the 11-digit number is raising the eyebrows of Honolulu Authority for Rapid Transportation Board Chairwoman Colleen Hanabusa and others locally.
The $10.79 billion figure is referred to as an “upper bound,” or highest possible cost projection. It appears twice — both times in statistical tables and not in the text of a 65-page document referred to as a “Risk Refresh” final report by Jacobs Engineering Group that was handed to HART by the FTA on Friday.
LATEST COST SCENARIOS
The latest report on financial risks associated with the Honolulu rail project shows one analysis with a highest possible price tag of $10.79 billion to complete a 20-mile rail line to Ala Moana Center. The same analysis in 2014 showed $7.59 billion — a figure closer to the $8 billion most recently cited as the project cost. As late as January when the City Council approved an extension of the GET surcharge to help pay for rail, it was being described as a $6.57 billion project. This data was presented to the Federal Transit Administration:
April 2016 models
$10.79 billion: Highest possible cost
$7.17 billion to $8 billion: Likely range
$6.48 billion: Lowest possible cost
July 2014 models
$7.59 billion: Highest possible cost
$5.10 billion to $5.67 billion: Likely range
$4.62 billion: Lowest possible cost
The FTA said in a statement Wednesday that “the Risk Model Data (that contains the $10.79 billion figure) is part of the risk modeling process to determine the appropriate levels of contingency for the project.” As a result, the FTA said, “it does not reflect the project cost estimate range, and it is not accurate to refer to the data as a worse-case scenario.”
The FTA’s statement emphasized that the report “indicates the total cost to complete the project will range between $7.73 billion and $8.01 billion, with an estimated completion date of December 2024.”
The agency is requiring that the city submit a recovery plan addressing the difference between that range of figures and the projected $6.8 billion in total revenues expected. Both Mayor Kirk Caldwell and City Council Chairman Ernie Martin suggested last week that HART talk to federal officials about ending the route for the initial phase at Middle Street, about 5 miles short of Ala Moana. The city has until Aug. 7 to submit a plan.
But Hanabusa said she’s taking the $10.79 billion seriously, even if it is at this point considered only a remote possibility.
She noted that the 2014 report by Jacobs put the upper-bound figure at $7.59 billion. In other words, she said, the current estimates already are higher than the worst-case scenario projected two years ago. If the city had considered the $7.59 billion as a serious possibility, it should have asked the 2015 state Legislature last year for more than a five-year extension of the 0.5 percent rail surcharge.
Both decision-makers and the public need to recognize that “if the decision is that we need to search for additional funds, then we have got to be realistic as to how much this project is really going to cost,” she said.
Hanabusa said she first saw the $10.79 billion figure in Jacobs’ April draft report, but that it didn’t alarm her then because both FTA and HART officials had an opportunity to provide input on the details in that draft before the final report came out.
“The fact that it exists, and was not taken out, is problematic to me,” Hanabusa said, adding she’s puzzled why there isn’t any reference to it in the text of the report. “If it’s not significant, why do we even have it in there? We’ve gotta understand why that number is there. The fact that the number is there, it’s gotta play into the analysis somehow.”
Former U.S. Rep. Charles Djou, a candidate for Honolulu mayor and longtime rail critic, said he’s also bothered that it’s possible the price tag could go to $10.79 billion.
“I think we very much need to care (about the $10.79 billion possibility) because in 2014 they said the extreme, worst-case scenario was this project would go to $7.6 billion,” Djou said. “And now we’re at least half a billion dollars above that.”
As the estimates continue to escalate, it’s further evidence that “the public can’t trust the city and this administration with the handling of this rail system,” he said. “It is going from bad to worse. In fairness to the FTA, they’re not saying it’s likely to occur, but $10.8 billion is within the realm of possibility.”
Two years ago, despite transit leaders declaring that the project was “on time and on budget,” Djou said, “it was never pointed out that the upper-bound number was $7.6 billion and I think the public needs to fully understand what worst-case scenario really, truly is. And we’ve already blown through the worst-case scenario of 2014 and now here we are within eyesight of an $11 billion project. This project is a mess. It’s out of control.”
Former Mayor Peter Carlisle, who is also challenging Caldwell’s re-election bid, said he isn’t as concerned about figures that the folks who came up with them believe should be ignored.
“The FTA has told you that the range is $7.73 billion to $8.01 billion, and then there’s a number somewhere that goes to the amount of $10.8 billion,” Carlisle said. “And the FTA is telling you, about the number they generated, to ignore it. That answers any questions I have.”
Caldwell spokesman Jesse Broder Van Dyke said the mayor would defer comment on the latest figures to Hanabusa, his appointed HART board chairwoman.
Panos Prevedouros, chairman of the University of Hawaii at Manoa’s Transportation Engineering Department and a vocal rail critic, said he believes the $10.79 billion figure shouldn’t be considered a worst-case scenario, but for different reasons than those cited by the FTA. “I would be hesitant to accept anything as an overall maximum,” he said. “Practice has shown that quite a few maximums have blown over many times over.”
HART Executive Director Dan Grabauskas and Deputy Director Brennon Morioka were at a conference and were not slated to return to the office until today, HART spokesman Bill Brennan said. He referred questions to Hanabusa.