Caldwell again calls for HART to nix P3 process

Mayor Kirk Caldwell on Monday again called on the Honolulu Authority for Rapid Transportation to nix its two-year quest to find a private partner to help build the final leg of the $10 billion East Kapolei-to-Ala Moana line and focus on other ways of ensuring that $250 million in promised federal funding won’t lapse by the end of the year.

The HART board is slated to vote on whether to cease the public-private partnership (P3) procurement process at its meeting today, a move that would go against the recommendation of Andrew Robbins, HART’s CEO and executive director.

Caldwell and his administration had been working hand-in-hand with HART on the P3 process but backed out in August. The mayor told reporters Monday that the decision was based on the likelihood that a P3 contract would put the project over what had been estimated, thus defeating the reason to procure a partner in the first place.

“We need to get a plan to the FTA shortly,” Caldwell said, noting that the city has until the end of the year to present a plan to satisfy concerns raised about project funding by the Federal Transit Administration. The $250 million due to lapse is a portion of the $1.55 billion that the FTA promised, and Caldwell voiced concern that federal officials could ask for the entire amount back if the city does not build 21 stations and 20 miles of guideway.

Caldwell presented an eight-point “conceptual plan” that includes amending an existing contract with Shimmick/Traylor/Granite, which is tasked with building the airport guideway section, to allow the company to extend its work as far down Dillingham Boulevard as possible.

The remaining segments of the final, 4-mile leg then could be segmented into three separate proposals where contractors would submit bids for each section, he said. Those three segments would be: building the guideway and stations from Kalihi to downtown, building the Pearl Highlands Garage and Transit Center, and constructing the guideway and stations to Ala Moana, he said.

But in order to do that, HART will need to determine how far the project can be built within the parameters of its budget, Caldwell said, noting estimated revenue for both general excise and hotel room taxes, the two main sources of revenue for the project, are forecast to drop significantly due to the economic setbacks caused by the coronavirus outbreak.

“And then we need to keep building somewhere closer to town, hopefully downtown, based on HART’s certification of funds … to find out what is the amount that we actually have and where does that get us.”

The P3 process has been delayed several times. Bids were finally accepted in August, and the hope then was for a contract to be signed in September.

There’s been broad speculation that the P3 bids are over $2 billion, significantly more than the $1.6 billion that HART officials had anticipated. Robbins and other HART officials said procurement laws preclude them from releasing any details of the bids until the process is over. “They become public domain upon cancellation, and we can all look at what’s in the bid.”

Caldwell said while he doesn’t know for sure whether that’s true, he suspects the contract would have been awarded by now if the bids did come in within budget. If the procurement process were to end, the details could be released, he said.

Exploring other funding options should also already be underway, he said.

The mayor acknowledged that going with his conceptual plan would likely extend the timeline for the project, which is now estimated to be fully done in early 2026. “It’s going to be a while down the road, folks … but we can’t give up,” Caldwell said.

In response to Caldwell’s comments, Robbins said P3 or not, his staff already has been looking at the suggestions made by the mayor in his conceptual plan.

Extending the Shimmick contractual work into the Kalihi corridor was originally his staff’s idea but has been determined to be financially unfeasible, he said. Meanwhile, HART already is trying to speed up utility work along Dillingham Boulevard, and Robbins pointed out that Caldwell can help out with that effort by having his lieutenants expedite approvals of the agency’s plans.

Building the final phase of the project in segments is also his staff’s idea, and something they would pursue even without a P3 delivery method, Robbins said.

“Certainly, we’ll carry out all the (suggestions) that we’re able,” Robbins said.

Robbins said he wants more time to try to procure a P3 agreement and, short of that, gather what details he can from the P3 bids and see whether “post-procurement” meetings could result in “best and final prices” from the bidders.

He said he hopes to finish that work by mid-November and take a recommendation to the HART board, Caldwell and the FTA.

“If there is a problem, if costs are higher than you expect, for example, then you go through these meetings and you learn, and ideally you reissue the (request for proposals) based on what you learned and you go to your best and final offer. You give these bidders a chance to come in with better pricing.”

He said he continues to be disappointed that Caldwell withdrew from the P3 process. “He didn’t let the process play out. It’s very important to get into those post-proposal meetings, which we’re doing,” he said. “Once we do cancel the procurement, those bidders are gone forever.”

Robbins will try to convince his board of that this morning.