Rail leaders criticized for delaying audit into rising costs

Honolulu rail leaders are laboring to maintain public confidence in the project, yet their decision to defer an audit that would investigate how its price tag nearly doubled and its schedule got pushed back six years has critics crying foul.

Each year, an independent firm audits rail’s finances. Two other high-profile audits also scrutinized the transit project’s handling recently. But as costs have soared, some overseeing rail have called for an additional forensic, or “special,” audit.

It would aim to “clear up the past, see what went wrong with great specificity and restore public confidence in this project,” rail board member John Henry Felix said at the board’s Nov. 10 meeting.

U.S. Rep. Colleen Hana­busa also endorsed the idea last fall during her last meeting as Honolulu Authority for Rapid Transportation board chairwoman.

“Unless you understand what happened in the past, you’re going to make the same mistakes again,” Hanabusa said Oct. 27, the day before she left the board ahead of winning her congressional race. “Why did we sign that contract then? Why didn’t we wait? … Those are critical considerations that I think the public wants answered.”

However, other HART board members doubt another audit would offer more guidance than what they’ve already received. They also question whether it’s worth the $250,000 price tag. At their June 22 meeting, they voted in not to proceed after discussing the matter at length in closed session.

Most board members and Honolulu Mayor Kirk Caldwell say the city auditor’s lengthy, critical report on rail last year combined with the peer review by transit experts with the American Public Transportation Association already offer several dozen effective recommendations to better manage rail and curb its growing costs.

HART interim Executive Director Krishniah Murthy said he’s implemented most of those reports’ findings and will update the board at its Thursday meeting.

Nonetheless, Ember Shinn, Caldwell’s recent appointee to the voluntary rail board and his former managing director, drew the ire of rail critics when she explained why she opposed the proposed special audit.

“As a new member of the board, it’s not my intent to muck around in the past and try to figure out what we did wrong in the past,” Shinn said at the June 22 meeting. “It’s more trying to get forward and try to make sure that we’re spending appropriately.”

Shinn added that she liked the APTA peer review because it discussed “management and process as opposed to saying we made a screwy, stupid decision back then.”

During last week’s City Council meeting, several speakers concerned about project accountability quoted Shinn in their opposition to floating $350 million in city-backed bonds to keep rail work moving.

Officials estimate that rail faces a nearly $3 billion shortfall including financing costs. The system’s official launch date has been pushed back about six years to December 2025 — and the contractor hired by rail’s federal partners to oversee the project says it could take longer.

The conservative public-­policy think tank Grassroot Institute of Hawaii, which has been critical of the handling of the full 20-mile project, prepared its own timeline of the audit controversy and launched an online petition to revive it at AuditTheRail.com.

“Honolulu residents, previously divided for or against the rail, are now united on one point — the skyrocketing costs and poor financial management of the rail are unacceptable,” Grassroot Institute President and CEO Keli‘i Akina said in a statement.

Since late 2014 rail leaders have repeatedly pointed to the island’s surging construction market (and data from the firm Rider Levett Bucknall show Honolulu is one of the hottest such markets in the nation) to explain the skyrocketing cost. They also cite rail contracts being issued too early, changes to the system’s technology and design, and an 18-month delay caused by state and federal lawsuits that pushed construction into the hot market.

Meanwhile, the Honolulu city auditor’s office “found deficiencies related to HART’s cost controls that, in our opinion, partly contributed to the significant cost increases.”

The public has never seen a detailed, independent accounting for the cost spikes and delays.

In November, as HART board members discussed whether to include the $250,000 for the audit, the agency’s then-deputy director, Brennon Morioka, told them that staff was developing a “historical timeline” addressing the root causes.

The staff could present the timeline to the board in the next month or so, Morioka told them. That presentation never occurred, however, and Morioka left HART last month to work at Hawaiian Electric Co.

“You cannot audit yourself,” Felix said of the timeline in November.

Felix, a former City Councilman, was part of the five-member majority that narrowly defeated a half-percent general excise tax surcharge increase in 1992 that would have funded an elevated rail system similar to the one being built today.

About a week prior to the audit vote, Felix implored his HART board colleagues in a June 16 letter to consider street-level alternatives to rail heading downtown and approve the audit. He did not attend the June 22 meeting.

HART board member and city Transportation Services Department Director Wes Frysztacki agreed with Shinn at the meeting. At least some of the audit’s $250,000 cost could be better spent transferring rail operations duties to his department as required under a 2016 city charter amendment, Frysztacki said.

Before they discussed the audit, the board considered adding two more positions to HART’S public outreach staff.

“I do know that public confidence is at an all-time low,” Shinn said.

HART needs to better measure how successful it is at rebuilding that confidence, she added.