Council commits city funds to pay $44M for rail project

The Honolulu City Council on Tuesday approved a measure that allowed, for the first time, money from the city’s general fund to be used to finance the rail.

Gary Kurokawa, Mayor Kirk Caldwell’s chief of staff, and Budget Director Nelson Koyanagi told Council members that the administration is looking at two or three financing options that are transparent to the public, do not put the city in financial risk and get the funds into a Honolulu Authority for Rapid Transit account by the Federal Transit Authority’s Nov. 20 deadline.

One option would be a short-term com­mercial-paper form of borrowing, the choice Kuro­- kawa described as “least invasive.” Another would involve reopening the current 2019 operating budget to find $44 million in unused funds, an option that “is not the most optimal,” Kurokawa said.

But Councilwoman Kymberly Pine said it makes sense to take the money from operating budget reserves, aka the rainy day fund, rather than borrow money because HART officials have insisted they don’t actually need the cash infusion, they just need to have it on hand for the FTA. She urged the administration to discuss the matter further with Council members, “not through press conferences please.”

The administration likely will need to present a plan to the Council for approval at its next meeting, scheduled for Nov. 7.

Bill 42 (2017) allows the city to spend up to $214 million — no more than $26 million annually after 2020 — to help finance the administrative costs for construction of the now $8 billion-plus East Kapolei­-to-Ala Moana Center line.

Tuesday’s vote was 7-2, with members Ann Koba­yashi and Trevor Ozawa voting “no.”

The FTA had committed $1.55 billion to the project, but held up releasing about $745 million pending the new recovery plan, which the agency demanded after the project’s price jumped to $8.165 billion from $5.26 billion several years ago.

The FTA demanded the city come up with $44 million in taxpayer dollars to help pay for administrative costs associated with the project and set a Nov. 20 deadline to submit details on how that would be achieved as part of an overall project recovery plan.

Critics said that by passing the bill, Council members were going back on a 2006 decision to not use city funds for rail construction. Members of the Financial Accountability for Rail Mass Transit Association also argued that the city should halt construction at Middle Street until a state audit of the project is completed. Representatives from several construction and trade labor organizations supported the bill.

Council members said the FTA and Legislature imposed requirements that left them no choice but to use money from the city’s general fund.

In addition to Bill 42, Council members approved to four related measures needed to meet FTA’s demands.

Resolution 18-132 authorizes the administration to issue and sell $44 million in general obligation bonds to help finance rail. Resolution 18-239 approves the HART recovery plan that’s to be submitted to FTA.