Volcanic Ash: Dispute about rail delays puts HART over a barrel

It’s hard to decide what’s worse, the persistent bad news about Oahu’s $9 billion rail project or the city’s unrelenting efforts to put a happy face on the problems.

The latest bad news is that Ansaldo Honolulu JV, which has a $1.4 billion contract to supply cars and operate the 20-mile rail system, has filed a big claim over project delays that have pushed back completion from 2019 to 2026.

The Honolulu Authority for Rapid Transportation won’t say the amount of the claims under negotiation, but HART director Ember Shim called it “mega-substantial.”

HART Executive Director Andrew Robbins put the usual happy face on it, claiming the city can pay for any settlement out of its existing funding.

That’s been the story of this sorry project. The city always has contingency funds for major new cost overruns — until it doesn’t and has to crawl to the Legislature for another bailout.

The city gave Ansaldo the contract despite the company’s major performance issues on transit projects in other cities and significant legal and financial concerns surrounding its parent company.

HART has already fought with Ansaldo over quality of work, staffing deficiencies, switching from two-car to four-car trains, defective parts and delays in providing data to other contractors.

But Ansaldo appears to have the city over a barrel in its hefty delay claim.

HART is hoping to avoid further construction cost overruns by recruiting private partners to help pay for the final four miles of guideway from Middle Street to Ala Moana Center.

The sweetener in a public-private partnership would be including lucrative rights to operate the system, which means Ansaldo would have to be in the deal since its contract already includes the right to operate and maintain Honolulu rail for 14 years.

Ansaldo is evidently refusing to play in any such partnership until it gets a favorable settlement in its delay claim.

The city desperately needs private participation to avoid the likelihood of returning to the Legislature for a third bailout on a project originally budgeted at $5 billion.

Key legislators have said there will be no further extension of the excise tax surcharge for rail, and if they stick to their guns, the city would have little recourse but to turn to property taxes for funds to finish building rail and operate the trains.

Even there the Legislature is cutting off the city at the knees with a proposed constitutional amendment to allow the state to tax high-end investment properties — the least politically painful property tax — to pay for education.

If voters approve the amendment and the city’s option to tax investment property becomes limited, owner-occupants already strapped for cash could end up bearing the final burden on rail.

There’s no happy face to put on that.

Reach David Shapiro at volcanicash@gmail.com.