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Rail financing plan includes $1 billion bump in new $9.5 billion scenario

  • CRAIG T. KOJIMA / CKOJIMA@STARADVERTISER.COM

    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 twomonths ago.

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.

HRTP FFGA DRAFT Financial Plan December 2016 Final Version by Honolulu Star-Advertiser on Scribd

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      • They knew from the beginning that it was going to cost multiples of the advertised cost. Grabowski knew it; he went through the process with the Big Dig. Notice no penalties for cost overruns, etc. Rail guarantees income for years to come. It should be stopped, now.

      • I suggest everyone read the latest FFGA draft at the end of this story. The assumptions made are most enlightening. I particularly find comical the ridership projections in the future relative to what they are now for TheBus, especially considering only a 10% population growth between now and 2030.

        Oh, and the have no idea how they are going to pay off the 100’s of millions of dollars of debt still outstanding after 2027.

        • Lest you’ve forgotten, Mufi, when he was Mayor said that Caldwell (at that time City Manager) was his “go to man” for the rail. Looks like both of them were receiving “kickbacks” from developers and construction unions for their runs as Governor and Mayor.

      • The two bozo’s on the news last night looked absolutely clueless, and these are the guy’s we are expecting to complete this fiasco? All you i-d-iots that voted for Caldwell need to be footing the bill for the rest of us that had at least have a brain to know better.

      • I thought I was safe projecting $10B. Looks like I need to bump it up. Once we get closer to Ala Moana I’m saying HART will be hitting $14B. Any word on the power plant yet?

      • RUSTY THE HATED SCREECHNG RAIL REARS ITS UGLY HEAD AGAIN & AGAIN & AGAIN. Built on a foundation of lies, deception & backroom cash laden deals. Caldwell was the main Henchman when Muffee Da bully was lying to the public and Ansaldo was passing out the little brown envelopes of LUV full of GREEN CASH in 2006. Now 10 years later its not 2.6 Billion and UH Manoa but instead 9.5 on its way to 20 BILLION and only goes from one shopping center to another. We have been lied to over & over and then the Unions re-elected Caldwell- so sorry Oahu we have been had and in plain site.
        It is time to say enough is enough and ask Caldwell to RESIGN IN SHAME

        • Well the construction contractors and developers sure think he does the way they donate to his campaign to keep this mess oozing along.

        • So those “costs” weren’t available for consideration during the original bidding process? And the inevitability of the current situation wasn’t clearly outlined by rail opponents from the beginning?
          To cap the absurdity, now we’ve put Caldwell back in the driver’s seat. As the Guinness man says, “brilliant!”.

      • Same old repugs slamming a AP press about trump stories then believes the clever word/number twisting for RAIL. What a laugh. So gullible. Trump said he will support infrastructure. RAIL is infrastructure.

  • Read the book:
    “Confessions of an Economic Hit Man”
    What they used to do to 3rd World Nations, now they have turned their “Hit Man” methods on us, and we become their vassal servants via debt and interest payments!

    • Too late , we been the vassals decades already , but look on the bright side , a ride from Kapolei to Middle St will be a world record ticket price. Go Havaii Nei !

  • BWAHAHAAAA. $30,000 for every household on the island. Didn’t Trump say he could build a 2,000 mile wall for $10B? For the same price we get a 20 mile mall train. BWAAAHAHAHAAAAHAHAHAHAHAHAAAAAAAAAA

        • Do the other islands contribute to the costs?
          If they pay taxes towards the cost, then, yes his math is correct and you should recalculate.

        • No outer islands aren’t about to get caught up in that mess. They have their own mayors to deal with.

        • The outer islands are already paying for the rail. The tax is passed on to us hidden in price increases for anything bought thru Oahu.Retailers are business people, they don’t lose money, they pass on the loss.

        • Cigaripo – the surcharge does not apply to any goods sold outside of Oahu. The only way anyone from the outer islands would pay the surcharge is if they bought something while on Oahu.

        • On Oahu we have less than 400,000 households so how much per household????
          We have been lied to again!!!!!!!!!! NOBODY WANTS TO RIDE THE THING NOW THAT ITS FALLING DOWN AND THE STEEL SUPPORT TENDONS ARE BREAKING,, THE SHIMS ARE CRACKING AND THE CEMENT IS CRUMBLING AND THE COLUMNS ARE SINKING. OH WHAT A MESS CALDWELL HAS CREATED HE NEEDS TO RESIGN IN SHAME OR WE SHOULD KICK HIS A$$ OUT

      • Localguy, there are about 950,000 residents on Oahu, and probably less than half of them actually work and pay taxes after you remove the bums, kids, unemployed, under employed, housewives and military from that count. So the answer is, yes $30,000 per resident is a very real number. As usual, you try to be Mr Smarty pants but this time, you’re dead wrong!

      • Cost per capita is so blown away it is irrelevant to compare with benchmark. Costs are now in the range of high capacity subways per km. That means tunnels. Very complex subways can go upwards of $400 million per km. We are between $200 to $300 million per km and climbing, say circa $280 million per km. That’s in the range of metropolitan subways that are not very challenging. If our costs are truly following subways, then I think $13.2 billion is a good upper range at $400 million per km. God help us if that comes to pass.

      • Localguy, you been posting to this forum for years crying about rail and you had no idea the tax is only on Oahu residents? You have cat to be kitting me right meow. And another thing… I said HOUSEHOLD. Not people. There are 310,141 households on Oahu… $9,500,000/310,141 = $30,631. Your “non fuzzy” math is only off by a factor of 4+. Better spend your time brushing up on your math and reading comprehension skills instead of posting away on this forum.

        • and don’t forget to add the increase in container fees, rising by 50% over the next 3 years–Hawaii eats its’ own.

  • Anti railers have been 100% right from day one when we all said rail will not be built on time, on budget, final cost to be close to or exceed $10 billion.

    Remember this, “2004: Newly elected mayor Hannemann asserts that 34 miles of rail will cost $2.7 Billion.” Fact is the poor guy didn’t have a clue.

    http://www.newgeography.com/content/005156-live-honolulu-hart-rail-a-megaproject-failure-making

    I expect rail payment will follow the path of the convention center only worse. Paying more than the $10 billion when you add up all the final charges, interest, on and on.

    Taxpayers are being taken for a ride, property taxes will be going up. Our children and grand children will become rail work drones for their entire working lies.

  • SAD INDEED!!! even the people in charge don’t know how much this will cost to build, let alone maintain.
    The voters that wanted this have sentenced all of our families and their descendants to this boondoggle.

    Too bad the Hawaiian people had no voice in this, where are the protesters???

  • Caldwell promised on time and on budget but instead rail has gone from 3.7 billion under Mufi to almost triple that today under Caldwell. And it’s not even half finished yet, meaning it will almost certainly rise even further.
    Voters deserve the outrageous rip off Caldwell and his special interests are perpetrating on the people of Oahu. You re-elected a crooked, lying Mayor instead of an honest, honorable republican candidate who promised to stop this project from spiraling out of control as it now apparently has done. Every city in America is laughing at Honolulu and it’s gullible voters. In any other state this project would not have even costed the original 3.7 billion.

  • Not here to say We told you so and gloat.Just concern of all the state projects that have cost overrun. Why is that? Is it a built in system to reward contractors and screw the taxpayers. Has anyone have any information on the last couple years of state projects, the actual bid and final payout?
    Does this new cost projection mean the actual total will be 11 billion?

    • Dream on . 11 only if there is no power plant , and by then the cars will be obsolete anyway.

      You notice this is one of those Friday afternoon posts , the ones where everybody gets drunk all weekend and by Monday have forgotten ?

  • Is anyone surprised with this. The incompetent and inept Rail authorities will see the cost rise to $ 15 billion before we find out that the rail will be a failure serving
    just a few . The real problems will surface once the project is completed many years from now. Trump, a businessman will laugh at our failures and cut off any more
    Federal funds. Our bumbling representatives in Washington will become even more useless.

    • The reason for RAIL is bribery and here,s how they do it legally.

      We found that the nefarious Pacific Resource Partnership supported Carol Fukunaga with $86,000 in advertising for her 2012 election. AND under a different name, they gave Brandon Elefante $105,000 in advertising support. With this money, the percentage of Elefante’s support from the Ho’opili and Rail construction community jumped to 91%. Pretty amazing! He sure wasn’t going to vote against them! It is interesting, though, and it really is an education on these issues.
      Here’s The Friends of Makakilo breakdown on City Council campaign contributions:
      Council Member Total Contributions Amount from Hoopili/Rail Interests Percent
      Kymberly Pine $160,879 $116,801 72%
      Ernie Martin $451,240 $268,017 59%
      Ikaika Anderson $139,518 $100,668 72%
      Trevor Ozawa $183,320 $104,550 57%
      Ann Kobayashi $57,136 $24,450 43%
      Carol Fukunaga $258,321 $104,565 40%
      Joey Manahan $182,215 $83,512 46%
      Brandon Elefante $37,322 $24,292 65%
      Ron Menor $48,405 $34,650 72%

  • This project is as financially unsound as can be. It’s a real tragedy that Hawaii’s voters rejected real change and reelected Crookwell instead. The City Council has no spine, either so it’s time for Honolulu taxpayers to bend over again!

  • A billion here and a billion there. Before you know it, it will amount to some real money.

    Next shoe to drop, the Legislature will make the GET permanent. After all, the rail is for the public’s benefit and according to the experts, the public will definitely benefit.

    How are all of the new residents in Transit Oriented Developments going to get around without the rail and no adequate parking spaces for cars?

  • The initial budget was not $5.6 billion. Per Mufi’s first sales pitch to the public, it was $3.5 billion. I’m looking like a genius every time an article comes out about the rail. Back in the Mufi days, I predicted the final cost would be double digit billion and looks like it’s headed there easily.

  • Hanabatta is wiping the sweat from her hairy brow with relief that she’s out of this local yokel swamp and into a more ritzy swamp with nicer air conditioning.

  • We are F’d. This thing will cost $20 billion to build and 2 billion/year to op & maintain ( plus some more $ to continually fix the rusting post tensign cables). Like I say, and Trump would say, truly F’d. I think I’m moving off this rock while real estate prices are still high.

  • Shut this stupid thing down, don’t “throw good money after bad!” With any luck, the Trump administration’s FTA will have the conservative, fiscal responsibility to do what we can’t seem to do here in Hawaii – control our tax and spend lack of discipline.

  • I said it would cost 10-12 million $$$$$$$$$$$$ by the time the rail is complete. Why didn’t they I st say 10’billion when it started????? You always bid high.

    • They should start by doing a claw-back on the historic homes tax exemption and tax them all at current appraised home values and an additional 25% GET tax on them forever. After all, Krook lives in a $4 million dollar historic home of distinction and pays only $300 a year in property taxes! Poor guy needs a 2nd job at a bank to pay his property tax. haaaaaaaa

  • Now what with this over budgeted WHITE ELEPHANT!?!? It’s going to be under utilized with maybe a minor impact on traffic. Poor planning with almost no conveniently located park and ride facilities. How the heck are you going to incent ridership if you have to catch a ride or bike to the transit stations? This includes getting there and then having to go home. Take a look at the California set up, tons of park and rides for train, rapid transit and water ferry options! We all got screwed here in Hawaii!

    • A lot of “I told you so” concerning the huge and increasing rail cost. While it is all bad news for the citizens of Hawaii, there are many who make a small fortune off rail. Such complex projects are ripe for corruption. The project was mismanaged from the start, but nobody is held accountable. Part of the solution is the need for a two-party system in Hawaii, but Democrats have a lock on politics and that isn’t likely to change anytime soon. In fact, does anyone believe a one-party system is good for Hawaii? Maybe the SA will ask such a question to those in power. Now that would be an interesting story.

  • Financing willl be a lot less if our tourism has another good yeaar like the last. if so then we won’t need to extend the tax surcharge at all. Rail will be paid for when construction is pau.

  • i stated before they even built this rail that it would cost 10 billion dollars..my estimate might be too low..maybe 15 billion dollars now..plus they still gotta find the 100 millions dollars a year just to maintain this beast

  • Less than one month following the mayoral election, the projected costs of rail jumps more then $1 billion. I wonder why it was not known (made public) before Caldwell was reelected?

  • 2027? Cost will double, guarantee double digit inflation by then, loan rates doubled, and no one can afford to ride the rail. Taxes will have to double maybe triple to 1.5 % forever. Maybe in that 11 years the rail will look good in a museum and still looking for money to fund the museum…would cost way less in a museum.

  • All this was already known. Yet voters still elected same mayor. Unbeleivable!!!
    Any mayor who stops all this madness could be one of the greatest mayor this state has ever had. No ugly 20 miles of concrete structure
    with noisy trains in the middle of the cities. With just one billion dollars you will be surprised with what can be accomplished to better this Island.

  • Time to scrap this project. The $2 Billion to pay back the feds is far less than the $10 Billion it will cost to simply finish the project. Once completed there will be more expenses to get it running and maintaining the system. We will NEVER recover the cost from ridership. The Bus is a prime example. Passenger fares cover a little over half of what it actually costs to run the system.

  • I hope trump takes away the federal money and we stop the bleeding when he takes office.. it’s time we stop this for our future and the idiots who started this losing project.. we can use the existing structures for non shelters ????????

  • How long will rail’s costs continue to escalate before somebody in a position of authority (such as the mayor, the City Council Chair, or the HART Chair) orders a pause on the project and a re-examination for how to proceed? Does anybody believe that the members of the council who on Thursday unanimously supported the resolution to seek a further rail surcharge extension were not aware of the “Friday night surprise” of $9.5 billion? The new estimate further reduces the public’s approval rating for the project to about a third of respondents (based on an SA poll earlier this year). Stop building on the guideway at Aloha Stadium, move the workers to stations development in the first ten miles to keep them employed, and bring in an American urban magnetic levitation engineering team to explain how conversion to maglev can be implemented.

    The (maglev) project, with all 21 stations, can easily be completed to Ala Moana Center within the existing timelines (now shown as further delayed to December 2025) and budget of $6.35 billion (i.e., the amount realized from the 21-year surcharge and obligated federal funds). A maglev system also will save $2.9 billion to $3.4 billion at two or three percent inflation vis-à-vis steel wheels over 30 years of operations and maintenance. Will Congresswoman Colleen Hanabusa use her new “clout” to insist upon the peer review she called for when she was the HART Chair? Are the other three members of our Congressional delegation even aware that Honolulu has a rail project? Will our State Legislature, after expressing their strong displeasure with the city’s handling of rail, again “roll over” and grant the authority for another surcharge extension? This “Kabuki dance” played out in front of O’ahu commuters and taxpayers has gone on long enough. Pause the project and conduct the review.

  • Hee is something to consider regarding “just” a billion dollars…

    A million seconds equals 11 and 1/2 days, but a billion seconds equals 31 and 3/4 years.

    A billion dollars is an almost unimaginable amount of money. And 10 billion dollars from an island of less than a million people is simply obscene.

    • Kalaheo1: If when you’re out and about you ask a handful of people what they think about the new Rail Budget, I doubt anyone will know what you’re referring to. That is a big problem. A one party State is susceptible to such a project. The “Red flag” is the lack of penalties for not meeting deadlines, budgets, etc.

  • Time to stop the rail. This escalation will never end. Isn’t it funny that I predicted this latest estimation back in 2005. ALL who believe in the rail should in reality-rail will not reduce traffic and even built it will not reduce travel ime

  • How ironic!
    The new shocker of adding $1 billion to the price tag….
    less than a month after the election. I guarantee the
    $9.5 billion will not be the final price tag!!!!!

    • They had this information before the election but waited to release it until after it was over. Plus, as others have pointed out, they released the report on a Friday hoping the weekend would dampen the impact.
      Now that this done Kirky boy can concentrate on eliminating parking stalls and putting in bike paths.

  • The cost of the system is utterly crazy. The contractors, consultants, unions, staff, etc. are robbing us blind and they don’t care if they complete the system or not. In the meantime, the developers. landowners, mall owners, etc. are escaping with only paying pennies. As usual, we people are getting robbed blind. And our elected representatives have joined this effort with their own profit motives to benefit themselves personally, not the public good.

  • Wow amazing to see some of the trolls on this blog… I hope that the Federal Government will look at this project and realize that it is a losing project. I hope they pull the funds to this fiasco. I truly find it hard to believe that the people of Hawaii stand for this LOSING project.

    The one thing that might work… to start is a state lottery with proceeds going to the rail project like a fund raiser for lack of another term. It’s better solution than any thing our politicians can respond to…

    WE should PAUSE for a moment to tighten the budget.. You guys who run the rail project.. who started the rail project… and only make more boards / advisers to tell us how much more it is going to cost…is making us all dizzy…. We have not learned from building H-3 that we ALWAYS go over budget…WE will be in the Guinness World Record book for the most expensive rail system EVER built. WE are in the books for the “most expensive highway in the world” already for H-3 so why not do the LOTTERY?… anybody listening?…I just love it here in Hawaii with our dirty deeds done dirt cheap mentality..

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