Rail officials disclosed Friday that the transit project’s financing costs could be dramatically greater than previously reported and drive the final price tag to around $9.5 billion.

That’s nearly a billion dollars higher than the cost estimate they delivered just two months ago.

The latest figure is part of a long-awaited draft update to the rail system’s financial plan, which the Honolulu Authority for Rapid Transportation submitted to the project’s federal partners Thursday and then released publicly Friday.

It’s one of about two dozen scenarios that rail officials say they are studying to pay back bonds and interests on the project, where each one could drastically change the ultimate cost to taxpayers.

Nonetheless, the figure is based on a straightforward scenario in which state and city elected leaders extend rail’s general excise tax surcharge 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.

While the scenario is far from certain, it shows that costs for the project remain in flux and will largely depend on what happens during next year’s legislative session.

“The project budget could vary widely,” HART Acting Director Brennon Morioka told reporters outside rail’s downtown headquarters Friday. “It’s really going to depend on whatever finance strategy we come up with.”

It also raises questions about the updated project cost estimate of $8.6 billion that HART gave in September, which included $400 million to $500 million in financing and debt service costs.

Terrence Lee, who recently became the HART board’s vice chairman, said he was surprised when he first read the draft financial plan about a week and a half ago and saw a potentially much higher cost to build and finance the 20-mile, 21-station line to Ala Moana Center.

“I wasn’t happy about it when I learned about it, and that’s why I wanted to get to the bottom of it,” Lee said Friday outside Alii Place.

He said he later learned that his colleagues on the board instructed agency officials to assume that the project would be paid off entirely by 2027 — the year that the current rail tax expires — when they came up with the $8.6 billion estimate.

The figure did not specify how it would be paid off in that time frame.

“I wasn’t aware of that instruction, but I learned of it,” Lee said of the board’s order to staff.

Lee added that he’s instructed staff to more carefully disclose to the board and the public when it makes such assumptions that drastically affect cost estimates.

“The board, being a volunteer board, can only spend so much time digging into the granular detail of what goes on in a project like this,” he said. “We don’t want these type of surprises all the time.”

Morioka, meanwhile, emphasized that HART’s construction cost estimate of $8.2 billion has remained the same and that it’s only the financing scenarios that are now affecting cost. That figure includes about $1.4 billion in contingency money, representing nearly 20 percent of the total cost.

However, HART has typically included financing estimates as part of its total project cost estimates, too. Its initial budget of $5.26 billion included such costs.

Rail officials released the draft financial plan and its $9.5 billion scenario a day after the Honolulu City Council unanimously approved a resolution supporting a rail tax extension to help complete the project. Currently, it’s short by nearly $2 billion.

“The rising cost projections continue to be a major concern but we need accurate, updated information to make decisions about how to pay for the project that the voters supported,” City Council Chairman Ernie Martin said Friday in an emailed statement. “The City continues to work with our state and federal partners to come up with the money to build a rail line that connects the West Side to downtown.”

The resolution’s final draft includes new language stating that the Council will look into “all sources of funding” including a “permanent general excise tax surcharge.”

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 at Manoa and downtown Kapolei that could easily drive the final cost of the first 20 miles above $8.6 billion, Morioka said.

Morioka compared it to a home mortgage, in which the property has a set price but the financing can substantially drive up what the buyer ultimately pays.

“The longer that you have to bond something, the more interest that you have to pay,” he said.

HART continues to wait for an answer from the Federal Transit Administration on whether the local agency will get an extension until the summer to complete its rail “recovery” plan.

If it doesn’t get that extension, the plan will be due at the end of the month.

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