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Private sector could help city manage rail’s runaway costs, study finds


    Honolulu’s under-construction rail project, shown here in 2016, could benefit with the help of the private sector, according to a new study from the nonprofit Ulupono Initiative.

There’s no avoiding that Honolulu’s stalled rail project will need public funding for the city to complete it — but the private sector could still help deliver the transit system more quickly and efficiently, according to a new report.

The analysis, released today by the Hawaii-based social investment fund Ulupono Initiative, further found that stopping the project while local leaders decide what to do about it could cost the state’s taxpayers about $114 million a year.

“Kicking the can down the road is a very expensive proposition,” said Jill Jamieson, a managing director with the Chicago-based investment management firm Jones Lang LaSalle, which did the analysis for Ulupono. “Delaying a decision is not in anybody’s best interest.”

JLL’s report does not take a position on whether to extend the general excise tax, tap property taxes or use some other revenue stream, but it did recommend that policymakers make a “timely decision” on which public dollars to use. The analysis comes as state lawmakers consider how to address rail’s roughly $3 billion funding gap.

Jamieson said taxpayers would benefit if the city used private third parties to pay for the project’s final four miles into town plus a major transit hub at Pearl Highlands as that work occurs. Under that model, known as “design-build-finance,” the private investors wouldn’t be paid back with public funds until the project is finished, according to JLL’s report.

Such deals have been used for other major infrastructure projects in North America, and they provide an added incentive for the third parties financing the work to control costs and deliver the project as soon as possible, Jamieson said Monday.

She and Ulupono representatives are meeting with Rep. Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu) and other state legislators at the Capitol this week to present their findings.

Executive summary of the Honolulu Rapid Transit Project by Honolulu Star-Advertiser on Scribd

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