Rail officials disclosed for the first time today that the transit project’s financing costs could drive the final price tag as high as $9.5 billion — nearly a billion dollars higher than a cost estimate that was disclosed only about two months ago.
The latest figure is included in a long-awaited draft update of the rail system’s financial plan, which the Honolulu Authority for Rapid Transportation submitted to the project’s federal partners Thursday and which the agency released today to the public.
Outside of HART’s Alii Place headquarters today, rail leaders said the $9.5 billion was merely an example of how much rail could cost depending on how the city ultimately decides to pay back bonds and interests on the project.
The final price tag, they said, remains in flux and largely depends on what happens during next year’s legislative session.
However, the figure is based on a scenario in which the general excise tax surcharge for rail gets extended another 10 years at the same 0.5 percent rate. “One financing strategy could result in finance charges of up to $1.3 billion, which would bring the total project budget to $9.5 billion,” the new draft financial plan states.
That figure had never been provided to the public. HART Acting Director Brennon Morioka said that it was gradually developed over the past couple of months as the agency put together the draft plan. HART Board Vice Chairman Terrence Lee said he only saw the figure in the past couple of weeks.
When HART released its latest estimate of $8.6 billion in September, that figure included about $400 million in financing and debt service costs and, rail officials say, assumed the project would be paid off by 2027 when the current rail tax expires. The figure did not specify how it would be paid off in that time frame.
Even if state lawmakers approve a permanent rail tax extension, HART and the city could look at various financing strategies enabling them to expand rail into the University of Hawaii, Manoa and downtown Kapolei that could easily drive the final cost of the first 20 miles above $8.6 million Morioka said.
Rail’s estimated construction costs remain at $8.2 million, just as they were presented in September, Morioka said. It’s the financing plan that could drive up the final budget, he and Lee said today outside Alii place.
The initial budget of $5.26 billion included the financing costs.
The financing issues can be found on page 17 of the HART draft financial plan accompanying this story.