Federal officials insist Honolulu step up its funding of rail
The Federal Transit Administration is insisting the city contribute more money in the near term to help finance construction of the Honolulu rail project before it will release any of the $744 million in federal funding it has withheld from the project, according to an FTA spokeswoman.
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The Federal Transit Administration is insisting the city contribute more money in the near term to help finance construction of the Honolulu rail project before it will release any of the
$744 million in federal funding it has withheld from the project, according to an FTA spokeswoman.
That means the FTA is requiring that Mayor Kirk Caldwell and the City Council commit $25 million in city funds toward rail construction in the fiscal year that begins July 1 as well as a total of $92 million more during the following seven years before the federal government will resume funding.
It’s a bitter political pill for the Council to swallow. The original plan years ago was that no city funds would
be used to construct the
20-mile rail line, which was supposed to be funded with revenue from a half-percent excise tax surcharge on Oahu, and $1.55 billion in federal funding.
City Councilwoman Ann Kobayashi said the Council has little choice in the matter. “We have to do it, so we should have been preparing for this. There’s no getting around it, we have to pay it.”
She added, “I think if we just make $25 million in cuts, we’ll have the money. We’ve got to get through this, and we can’t make any more excuses, we just have to get through this.”
In fact, the Council can also borrow money as a way of providing the required funding for rail without cutting the city operating budget.
Council Budget Committee Chairman Joey Manahan said Tuesday he prepared an amendment to next year’s proposed construction budget that would
earmark $25 million in borrowed funds for rail construction to satisfy the FTA. The committee will consider that budget amendment at a hearing on May 14, he said.
Honolulu Mayor Kirk Caldwell said Tuesday he met with FTA officials twice last week and spent more than an hour during one of the those meetings trying to convince them there is no need for the city to frontload its contribution to the cost of rail construction.
“It does put greater pain on the taxpayers of the City and County of Honolulu at a time when it’s not necessary,” Caldwell said. “HART feels that they don’t need the money now.”
In the end, Caldwell said, it was clear the FTA would not budge, and “we need to do the things that need to be done to get rail completed all the way to Ala Moana. So, what’s it mean? We pay more now and pay less later.”
The cost of the rail project has skyrocketed from about $5.2 billion to about $9.2 billion, forcing city officials to seek state bailouts from the Legislature in 2015 and 2017 that totaled billions of dollars.
City officials also had to walk back the city’s long-standing pledge that city funds would not be used to finance rail construction, and agree, after a sometimes rancorous debate last year, to approve an initial $44 million contribution to rail construction in November.
HART last year proposed a back-loaded schedule for future city subsidies of rail construction that called for deferring most of the city subsidy for years, then requiring the city to pay
$26 million a year for five years starting in fiscal year 2026. However, the FTA rejected that plan in March, and is insisting that the city pay its share of rail construction costs earlier.
Andrew Robbins, CEO for the Honolulu Authority for Rapid Transportation, told reporters last month he hoped to convince FTA to relax the requirement for accelerated city contributions because the rail project doesn’t need the city money immediately. However, FTA officials who visited Honolulu last week were unmoved.
The FTA said in a statement Tuesday,“Last week in discussions with HART, the mayor of Honolulu and several city council members, FTA reiterated that it would approve the Recovery Plan (which is a precondition for the release of additional federal funding) after HART makes the required updates to its financial plan.”
That includes accelerating the city contributions, according to the FTA. Once HART revises its Recovery Plan and FTA approves it, the next $100 million in federal funding could be released as early as February 2020, assuming the city successfully awards an affordable contract to complete the rail line, according to the FTA.