Caldwell criticizes Hanabusa’s HART role

Honolulu Mayor Kirk Caldwell is wading into the Democratic primary for governor by publicly questioning U.S. Rep. Colleen Hanabusa’s role as chairwoman of the Honolulu Authority for Rapid Transportation, saying she failed to control the exploding cost of rail while she led HART.

Caldwell, who is supporting the re-election effort of Gov. David Ige, also said Hanabusa left HART at a critical time just as the search for a new executive director was getting underway. Hanabusa resigned from the authority in late 2016 after she decided to run for Congress.

“When I appointed Congresswoman Hanabusa to the HART board, and she went on to become the chair of the board, I expected her to get better control of the construction costs for rail, and that did not occur under her,” Caldwell said. “In fact, construction costs went up. That’s the simple, bottom-line fact.”

In an interview with the Honolulu Star-Advertiser, Caldwell also said Hanabusa “pushed and aided and abetted” a flawed plan by state lawmakers to use hotel room taxes to help pay for rail instead of extending for an extra year the half-percent excise tax for rail. Caldwell said that plan has now left city taxpayers responsible for $348 million in unfunded rail costs.

“The only way we’re going to raise that kind of money is we’re going to have to look at either raising real property taxes or cutting core services,” he said.

Hanabusa is challenging Ige in the Democratic primary for governor, and much of Caldwell’s campaign organization has been enlisted to help Ige as he tries to win re-election.

Caldwell’s account of Hanabusa’s shortcomings on the HART board in 2015 and 2016 was disputed by Hanabusa, who said she and her fellow board members did not have authority under the City Charter to control the cost of the project.

Hanabusa said she pressed the HART staff to disclose the project’s true costs, which were not publicly known when she joined the board. And as she did so, Hanabusa said she was told she could not even ask certain questions.

“There is an issue, there is a fundamental issue as to what the role of HART was, and to help him, and to keep my word to him that when I was on HART that I would ask those hard questions, he’s now saying that somehow it’s my fault?” she said. “We don’t even have the right to ask questions, and I’m responsible? Oh, come on, give me a break.”

“We didn’t set the price,” she said. “Believe me, in one year we’re not setting price. … That’s there, and it was hidden from everyone, including the public, and we just made it transparent.”

HART Chairman Damien Kim said there was “only so much the board can do” to control costs before the voters approved a change to the City Charter in 2016. HART is now adopting rules and policies to implement that charter amendment to give more power to the board, he said.

“There’s no real way at that time of HART controlling the cost itself of the rail,” Kim said. “The board does not control all of that cost. Contractors bid the job; whatever it comes out, we don’t control that cost on what they’re bidding. It’s whatever cost or pricing that comes out of it.”

Former HART board member Michael Formby, who was city director of Department of Transportation Services in the Caldwell administration, said he was surprised to hear of Caldwell’s comments. When Caldwell selected Hanabusa for the board, he was looking for someone to delve into the rail budget project, Formby said.

“His real desire was to have someone who would ask the tough questions and not be afraid of the answers — in other words, wasn’t afraid of being popular or unpopular, they’re simply going to ask the tough questions,” Formby said. “And that’s what he liked about getting Hanabusa on the board.”

Both Formby and Kim are committed Hanabusa supporters. Formby is now Hanabusa’s chief of staff in Washington, D.C., and Kim is business manager and financial secretary for the International Brotherhood of Electrical Workers Local 1186, which endorsed Hanabusa.

The escalating cost of the city’s 20-mile, 21-station rail project has been intensely controversial for years.

HART publicly revealed it had a major budget shortfall in December 2014, which forced Caldwell to ask state lawmakers to extend the half-percent general excise tax for rail. Lawmakers extended the surcharge by five years to fund what was then a $6 billion project.

Hanabusa joined the HART board in 2015, and by mid-2016 the price tag for building the 20-mile elevated rail line had climbed again to more than $8 billion. HART Executive Director Dan Grabauskas resigned in August 2016, and Hanabusa stepped down Oct. 28, 2016.

Caldwell then had to return to the Legislature for another rail bailout in 2017, “and I was hoping that that would not occur, that through her strength of character and personality, she’d be able to reverse the trend of construction budgets going up,” he said of Hanabusa.

Hanabusa was also instrumental after she returned to Congress in convincing state lawmakers to approve another rail bailout in a special session in 2017 that doesn’t cover all of the rail costs, Caldwell said.

That bill increased the hotel room tax statewide by 1 percentage point to 10.25 percent for 13 years to generate $1.32 billion for the rail project. The measure also extended the half-percent general excise tax surcharge on Oahu for three years to 2030 to raise another $1.04 billion.

Caldwell had advocated for a longer extension of the half-percent general excise tax surcharge on Oahu, and said the final bailout bill approved in 2017 has left the city $348 million short of what is needed to satisfy the Federal Transit Administration and complete construction of the project — money that Caldwell said must now be made up by city taxpayers.

“It’s very troubling,” Caldwell said. “You know, we wanted to just extend the surcharge one more year, but instead Oahu taxpayers are paying the surcharge now, they’re paying TAT and they’re going to be paying real property taxes to pay for the construction of rail that has never, ever occurred before.”

Caldwell said he met with Hanabusa in Washington before the special session to ask her to help him persuade lawmakers to extend the excise tax surcharge for a longer term, but she rejected that idea. Instead, Hanabusa argued that raising the hotel room tax to provide extra funding was a better solution because the city would receive the money sooner, which would reduce its borrowing costs.

Hanabusa said she does not remember that conversation, but said Caldwell wanted a 10-year extension of the excise tax surcharge that would have left the city with a large surplus beyond what was needed for rail.

“I understand,” Hanabusa said. “It makes it easy for the city in paying their bills, but it’s not good for the taxpayers.”

Hanabusa said she told Caldwell she would serve out the last year of the unfinished term of HART board member Carrie Okinaga, who left the board in mid-2015. She said she actually stayed longer than she promised, resigning in late October 2016.