The loss of roughly $220 million in federal funding may be imminent if the state and city don’t reach agreement on who would ultimately be responsible for putting up matching funds required to proceed with shoring up the Ala Wai Canal to protect Waikiki should the waterway overflow.

The Army Corps of Engineers must find a sponsor for its $345 million Ala Wai Flood Risk Management Project by Wednesday, and there’s no guarantee the deadline will be extended by corps officials in Washington, D.C.

To lessen flood risks, the corps would build a wall around the canal and put huge flood-control structures in the upper reaches of the watershed. The canal was built in the 1920s to create land for Waikiki development.

Now the epicenter of the state’s tourist economy is at risk if the canal overflows.

The issue is that the corps needs the state or the city to agree to become project signa­tories. The state has agreed, at least in theory, to pay $125 million for the project, the amount required to receive $220 million in federal matching funds. The city has agreed to serve as the project’s sponsor and maintain what gets built. But so far, neither entity has signed an agreement.

The state Attorney General’s Office said the “state hasn’t changed its position — it is willing to provide major financial backing for this project provided the city takes responsibility for construction and maintenance.”

“Whether the city will move forward on these assurances and what the impact will be if the city declines the state’s assistance — are questions that should be posed to the city.”

But the holdup on the city’s side is that Honolulu officials are still working out details with the state for how it will provide the capital funding for the project, according to Andrew Pereira, Mayor Kirk Caldwell’s communications director.

Gov. David Ige sought $125 million in this year’s budget to meet the federal cost-share requirement, but House Finance Committee Chairwoman Sylvia Luke did not move the measure forward because she viewed it as a city responsibility.

Initially, state officials did not view the funding failure as a major setback given the federal government was willing to take the money in future installments. However, the state didn’t count on the city’s reluctance to serve as a sponsor on a project that wasn’t fully funded and would therefore require the city to assume more risk.

Waikiki Neighborhood Board member Jeff Merz said the current impasse is serious and that government officials need to work it out.

“We are about to lose (funding) that I’m sure other states would have loved to have. We need to order some pizza and lock the city and state in a room. We need to say, ‘We aren’t letting you out until you work it out,’” he said.

Merz said he’s also hoping Hawaii’s congressional delegation intervenes.

“They fought hard for this money, and if we lose it that will reflect poorly on this island, like when we lost federal rail funding (decades) ago because it was short one vote at City Council,” he said. “With climate change, king tides and everything else that’s coming, this project is a necessity. We‘d better protect Waikiki or the whole economy of our state could be destroyed.”

Mauka opposition

The Ala Wai watershed is a 19-square-mile area that joins water bodies from the ridge of the Koolau Mountains to Malama Bay’s nearshore waters. Discussions among the Army Corps of Engineers, the state and the city on the Ala Wai Canal Flood Risk Management Project go back years.

But reviews were mixed from the start on the proposal to put a 4-foot-tall concrete wall around the canal and place six in-stream debris and detention basins in the upper reaches of the watershed. The project also includes pump stations, a stand-alone debris catchment and three multipurpose detention areas in open spaces throughout the watershed.

The corps estimates a major flood could damage 3,000 structures and cost more than $1.14 billion.

However, an April town hall meeting in Manoa on the project drew hundreds who were mostly opposed to the plan, which would affect public streams and properties for roughly 40 private owners including schools.

Dave Watase, who is leading the Stop Ala Wai Project hui, said seven out of eight neighborhood boards in the Ala Wai watershed passed resolutions urging government officials to delay the project. Watase, who would lose the lot he purchased for his children, said the Waikiki Neighborhood Board was the only holdout.

“They didn’t let me even give a presentation,” Watase said.

If they had, Watase said he would have shared outstanding complaints about “the corps’ lack of engagement to communities and affected stakeholders.”

Watase said opponents of the project have complained the corps did not present enough options or include adequate ecosystem restoration initiatives. They also question the accuracy of the corps’ modeling.

“We don’t want the federal money unless it could be used in a different way that didn’t threaten schools, private property and thousands of feet of streams,” Watase said. “Right now the Army corps is going ahead with the topographical and geotechnical contracts. I would think that’s a waste of taxpayers’ money since the project might not move forward.”

Honolulu City Council member Tommy Waters, who hasn’t taken a position on the project, has formed a “permitted interaction group” with Council members Ann Kobayashi and Carol Fukunaga to allow for broader discussions on the proposal.

“I think we should slow down a little bit and talk about different solutions,” Waters said.

In the meantime corps officials here have been directed to keep moving forward with negotiations, data refining and community outreach, said Jeff Herzog, the organization’s Ala Wai Flood Risk Management Project manager.

Unrelated dredging

Meanwhile the state Department of Land and Natural Resources is starting on a separate $21 million-plus Ala Wai dredging project in August or September.

That’s good news for those who have been waiting nearly two decades to get some relief from the buildup of sludge, sediment and debris in the man-made canal. DLNR said a recommended dredging interval is every 10 to 12 years, and the canal was last dredged in 2002 and 1978.

Herzog said the dredging project won’t have any bearing on what the corps is trying to accomplish.

“The state’s Ala Wai dredging project is completely separate from the Ala Wai Flood Risk Management Project. Dredging the tidally influenced canal is not a sufficient measure to increase storage capacity in the canal,” Herzog said.

Still, it will bring the canal’s recreational users and nearby residents and businesses some relief.

Lifelong paddler Henry “Kruiser” Kruse said parts of the Ala Wai Canal have grown nearly impassible for outrigger canoes since the state last dredged.

“I’ve been paddling on the Ala Wai Canal since 1977, and conditions are the worse than they’ve ever been,” Kruse said. “This past winter we had a few heavy rains, and debris came down the mountain into the canal, forming a 15-foot-by-20-foot island of grass and mud and everything else. We saw everything from baby toys to water heaters, iceboxes, sofas. It was just nasty.

“There are places up on the mauka side from the Marco Polo condominiums to ‘Iolani high school where you can’t paddle a canoe without hitting mud.”

Kruse is just one of many who support the state’s plan to dredge the canal and repair two sections of its walls.

DLNR’s Engineering Division told the Waikiki Neighborhood Board earlier this month that it plans to dredge the canal to depths ranging from 6 to 12 feet, removing about 186,000 cubic yards of buildup. Canal walls will be repaired on the mauka side fronting Ala Wai Community Park and between the Kalakaua Avenue and McCully Street bridges.

Work hours for the yearlong project are 7 a.m to 10 p.m. Monday to Saturday and 9 a.m. to 10 p.m. Sundays and holidays.

Dredging is expected to help maintain the canal’s ability to efficiently move stormwater to the ocean, reduce the risk of flooding and improve recreational use of the canal, DLNR said.