City officials now don’t expect the first segment of the $9.2 billion rail line will be operational until March, three months later than had been forecast.
Transportation Services Director Wes Frysztacki provided a brief explanation to the City Council Budget Committee on Tuesday. When the Caldwell administration first submitted the city’s $2.98 billion operating budget for the coming year, the city appropriated about $36 million for six months of rail operations to begin in December, he said.
“Right now we’re projecting that interim operations for rail will not start any earlier than March of 2021,” said Frysztacki, “thus requiring only half of the $36 million.”
The semi-autonomous Honolulu Authority for Rapid Transportation is tasked with building the over-budget, $9.2 billion rail line that runs 20 miles from East Kapolei to Ala Moana Center. Frysztacki’s Department of Transportation Services is responsible for operating the line as well as TheBus and other transit modes.
The good news, city Budget Director Nelson Koyanagi said, is that the $18 million can instead be used to help offset a $130 million shortfall in anticipated revenues in the city’s general operating budget as a result of the coronavirus-related economic downturn.
Andrew Robbins, chief executive officer and executive director of HART, said the guideway for that first 10-mile segment — from next to the Kroc Center in East Kapolei to Aloha Stadium — is already completed, and the nine stations along the section are almost done.
“We’re very much into the testing phase,” Robbins said.
“Largely due to the COVID-19 but also just normal operational issues related to making all of the technology functional, we are at the point now where we’re running about eight weeks behind our original objective before the COVID-19 struck,” he said.
That’s four weeks longer than Robbins estimated would be the delay from his original October timetable when the outbreak began in mid-March. At the time, Robbins insisted that the pandemic would not affect the December first-segment opening, given that HART had allowed itself two months of testing time.
Hitachi Rail Honolulu Joint Venture, which holds the contract to provide the project’s 20 trains, has had some problems with having technical experts available here for the project as result of the pandemic and, to a lesser extent, delivery of materials, Robbins said.
Mayor Kirk Caldwell, asked after the meeting about the latest delay, said he “personally felt that HART was very ambitious with its October opening,” but added that it’s more important the completed project is safe.
Noting that his time as Honolulu mayor is done at the end of the year, “I would’ve loved to have seen an interim opening before the end of my term,” Caldwell said. “But I think it’s all about being safe, and the project should not be up and running until it’s been tested thoroughly for 90 days. If there are any problems, it gets retested, and only then do you pick an interim date.”
Robbins said he is OK with the plan to trim HART’s operating budget by about 12.4% but objected to the elimination of eight government relations and public-information positions that he believes are critical for the project.
The eight positions would net a savings of about $782,000, according to numbers provided by Council Budget Chairman Joey Manahan.
“We must have public involvement as part of the project; it’s a federal requirement,” Robbins said. “It’s one of the most important things we do, the outreach to the community.”
The committee left the cuts in the budget, which will be up for a final vote of the full Council on June 3.
Budget Committee members grilled HART officials about what possible negative impacts the pandemic will have on completion of the full 20-mile line to Ala Moana.
HART told the Council last month that it was anticipating a loss of roughly $80 million in state hotel room and general excise tax dollars for the project.
On Tuesday, HART Chief Financial Officer Ruth Lohr said that’s now closer to $100 million, noting that $40 million less is now expected in each the July and October quarters.
Councilwoman Kym Pine asked whether HART expects city taxpayers will need to provide more funding for the project if there is an additional shortfall. Lohr said it’s expected that a public-private partnership entity would need to shoulder that responsibility.
Meanwhile, HART is closely monitoring monthly revenue collections from the state. “As soon as the collections that represent the March business activity … is known, we’ll have some sort of idea of impact to the funding that HART may have,” Lohr said.
Pine said, “Sounds like your solution is to come back to the city to fill that budget gap while the city, as well as the state, will be having their own budget gaps that they will have to deal with. You need to start thinking about how you proceed.”
Lohr said she expects HART would present the Council with possible solutions. “The idea wouldn’t be just that we come back and say, ‘Hey, we need more money.’ I think the idea is that we should come back with, ‘Here’s the potential solutions, and here’s what we have attempted to pursue for funding.’ … I think the onus is on us.”
Robbins reiterated that procurement of the private, third-party vendor to complete the final leg of the project has been delayed by three months at the request of potential bidders because of the unforeseen impacts of the pandemic.
Proposals are now due July 23, and the award won’t be announced until September.
Council members noted that the Federal Transportation Administration has been withholding the release of a promised $744 million for the project pending a look-see at the public-private partner bids.
Robbins acknowledged that FTA officials aren’t happy with the selection of a vendor. However, “I would anticipate that we’re not the only rail authority going through this,” noting that it’s his understanding other projects are running into similar issues.
Robbins said it’s not likely FTA would pull back its commitment as a result of the delay. “We have an approved recovery plan which took a lot of effort; it was about a three-year effort before the FTA would approve it,” he said.
After being asked several times when he expects the first of the remaining money will be available, Robbins said likely “by the end of August.”
“We’re in dialogue with them right now,” he said, and HART is hopeful it can receive some help even before July 23.