Jitters resurface over rail costs

For more than a year, rail leaders have maintained that their estimates tied to completing the cash-strapped 20-mile rail project from Kapolei to Ala Moana are solid. And that show of confidence has been somewhat reassuring.

But due to the latest report on Honolulu’s troubled transit project, which estimates the project will now cost about $134 million more than the city’s forecast, price tag jitters are again surfacing.

What’s more, the semi-autonomous city agency shepherding the project,Honolulu Authority for Rapid Transportation (HART), is now prepping for the final 4 miles of construction — into a congested urban core that rail’s critics have long asserted could rack up huge unforeseen costs.

The HART board is expected to vote this month on whether to seek its first business-sector partner — through a public-private partnership — to help complete construction. Contracts currently have been awarded through a design-build process.

Backers of the P3 model, including HART Executive Director Andrew Robbins, say such an arrangement could cap the city’s share for the project and transfer the risk of additional costs to the private partner, who would design, build, finance, operate and maintain in tandem with the city. Because the partner would have a long-term stake, it could be more likely to have fiscal and schedule discipline.

While HART has not epitomized such discipline, it has had some seemingly unavoidable setbacks. For example, some cost overruns are linked to projections mapped out before 2012, the first of four years when Honolulu became the most expensive city for construction nationwide, according to a national construction cost index.

The HART board should weigh the P3 matter carefully, as a private partner’s first impulse is likely to satisfy shareholders, not Hawaii’s taxpayers.

Oahu taxpayers are financing rail by way of a general excise tax (GET) surcharge, and visitors statewide are contributing with a slice of transient accommodations tax (TAT). Taxpayer concerns about how much this construction odyssey — now in the works for almost a decade — is going to cost are echoed by the city’s public-sector rail partners at the Federal Transit Administration.

In December 2012, the FTA committed to providing $1.55 billion for the project. But it’s now withholding about half, pending an acceptable project-recovery plan. That directive came down two years ago — when the rail line’s start-to-finish estimate had increased by 55 percent over its estimate from December 2014, when the cost was put at $5.3 billion.

A final recovery plan was submitted last fall, but an FTA decision is still pending. Mayor Kirk Caldwell has urged the City Council to pass a bill that gives the city the authority to use money from general funds — including property tax collections — as it could help finance potential rail costs and, perhaps, secure more confidence from FTA partners.

The Council’s majority is right in its refusal. Standing city ordinance bars the use of the city’s general funds for rail construction — floating bonds could open wide the doors to much more spending.

Among the conclusions in the just-released “risk refresh report,” by independent consultant Jacobs Engineering Group:

>> The final cost could be nearly $8.2 billion, about $134 million higher than HART projected — and that’s before financing costs, which could add up to $855 million more.

>> And there’s a 65 percent chance the project won’t be fully operational until September 2026 — about nine months later than scheduled.

Still, HART insists it now has a firm fix on costs, saying they have not gone up significantly since May 2016. We’ll see.

By 2030, according to projections, nearly 70 percent of Oahu’s population and more than 80 percent of the island’s jobs will be located along the rail corridor. Here’s hoping that by then the trains slated to travel the line will be shuttling those projected passengers.