City is withdrawing from P3 Honolulu rail procurement process, Mayor Kirk Caldwell tells feds

The city has notified federal authorities that it is withdrawing from participating in the procurement of a public-private partnership for the $9.2 billion rail project.

Mayor Kirk Caldwell notified the Federal Transit Administration of the decision to “conclude its participation in the procurement of a Public-Private Partnership,” city officials said in a news release.

According to the city, it is now up to the Honolulu Authority for Rapid Transportation to cancel the procurement.

“Until it is canceled, the procurement remains active, which keeps the details of the proposals confidential,” the press release said.

“I remain committed to the rail project and encourage HART to explore a more open and effective approach of continuing the construction to Ala Moana,” said Caldwell. “I hope to see the timely development of an alternative bid strategy, such as a more traditional design-build approach, so this important transportation infrastructure project can continue to move forward.”

Andrew Robbins, HART’s executive director and CEO, responded in a statement, “While the city has announced its withdrawal, I need to emphasize that HART is not canceling the procurement and is instead considering its options as to how best to now move forward with the construction of the City Center segment and completion of the project.

“HART is very disappointed in the City’s decision to withdraw,” he said. “World class teams of developers and contractors stand ready to complete the project for the people of Honolulu. After nearly two years of detailed work on the current City Center procurement, HART does not consider it in the public interest to walk away at this point, especially since the Hawaii Procurement Code provides opportunities to achieve a successful contract award, as was pointed out yesterday to the HART Board of Directors by the State Procurement Officer.”

The public-private partnership was intended to help ensure the financial burden shouldered by the city and its taxpayers is minimized to no more than about $1.4 billion. In July, HART announced that two or three proposals were received by a July 23 deadline and deemed acceptable and under consideration.

The procurement decision was to be made jointly by HART, the semi-independent agency tasked with building the rail project, and the city’s chief procurement officer. The city Department of Transportation Services, headed by a director appointed by the mayor, is tasked with operating and maintaining the rail line when it begins operations.

The FTA has given HART until Dec. 31 to determine how it will fund the final construction phase. HART has to show “satisfactory project progress” on an approved recovery plan that’s supposed to address how the city is to meet the project’s escalating price tag.

The plan is key to avoiding the lapse of $250 million in federal funding. The money is part of a $744 million tranche of the FTA’s $1.55 billion share of the project that’s been withheld by federal officials until they are satisfied with the city’s plan to move forward.