Federal inquiry linked to rail

Federal investigators are taking an interest in Hono­lulu’s $9 billion rail project, but it is unclear what has attracted their attention.

Officials with the city, state and federal governments who spoke on condition that they not be identi­fied told the Honolulu Star-Advertiser that they are aware of the federal inquiry, which involves the Honolulu branch of the U.S. Attorney’s office. An investigator with the state Attorney General’s office is also involved, according to multiple sources.

Assistant U.S. Attorney Larry Tong would not confirm the existence of a federal investigation into issues related to rail, but it is standard practice for law enforcement agencies to refrain from publicly discussing or even acknowledging ongoing investigations.

Andrew Pereira, spokesman for Honolulu Mayor Kirk Caldwell, said in a written statement that Caldwell is not aware of an investigation of the project by the U.S. Attorney’s office.

“The rail project is federally funded. That being the case, federal agencies tasked with project oversight often times review the project, which some might think is an ‘investigation of rail by the federal government.’ If that is an investigation, then that’s the only type of federal investigation the mayor is aware of,” Pereira said in the statement.

Andrew Robbins, executive director for the Honolulu Authority for Rapid Transportation, said in a written statement that, “I really have no comment on the speculation there may be some sort of investigation. I haven’t been contacted, nor am I aware that anyone else at HART has.”

The state Attorney General’s office did not respond to a request for comment Friday.

Sources who describe the interest from federal authorities as an investigation were unsure what aspect of the rail project is under scrutiny.

The Federal Transit Administration has agreed to provide $1.55 billion to help finance the rail project, but has withheld nearly $744 million of that money until HART develops an acceptable “recovery plan” for rail.

The rail line from East Kapolei to Ala Moana Center is the largest public works project in state history, and the city has struggled for years with cost overruns and construction delays.

The city signed an agreement with the FTA in 2012 that called for rail’s elevated guideway and 21 stations to be built for $5.26 billion by 2020, but the project is far over budget. Construction and financing of rail are now expected to total about $9 billion, and the rail authority expects to finish the system in late 2025.

Some of the cost increases within the project budget have been breathtaking. HART documents show the budget for professional services such as engineering, project management and construction management for rail ballooned from $1.183 billion in 2012 to more than $2.08 billion today.

Another budget category called “sitework and special conditions,” which includes utility relocation work, increased from $1.1 billion in 2012 to more than $2.54 billion today.

State lawmakers last year approved a $2.4 billion financial bailout of rail using state hotel room taxes and an extension of the half-percent excise tax surcharge on Oahu, which was the second time the state had to intervene to shore up the project’s finances.

That second bailout prompted state lawmakers to instruct Hawaii State Auditor Les Kondo to scrutinize the financial management of the project to determine whether the money being poured into rail construction is “being managed and used in a reasonable manner.”

Since his staff began its examination last year, Kondo has twice attended meetings of the HART board to publicly announce that he is encountering what he calls “interference” in the audit process by the rail authority.

Kondo learned in May that HART employees are required to record their interviews with the auditor, which Kondo said sends a signal that “Big Brother is there, Big Brother is listening.” Kondo described that practice as “unprecedented” and told the HART board it sends a message to employees “they better toe the company line.”

HART officials say they do not listen to the recordings of the auditor interviews, and the sessions are taped to protect the employees. They also note that the auditor’s staff also records the interviews with rail employees.

The rail authority also is withholding from the auditor the minutes from years of HART board meetings that were closed to the public, but Robbins has said his staff is “working hard to cooperate” with the audit and has provided almost every document the auditor requested.

Last month the HART board of directors unanimously approved a recovery plan that maps out the path to completion of the project by 2025 or 2026. That plan has been submitted to the FTA for its review.

Honolulu Star-Advertiser reporter Gordon Pang contributed to this report.