HART board’s 7-2 vote fails to halt P3 process

The Honolulu Authority for Rapid Transportation voted 7-2 Tuesday to direct CEO and Executive Director Andrew Robbins to halt a two-year effort to secure a private partner to complete the $10 billion-plus rail project and to instead proceed with a Plan B.

But the motion to approve Resolution 2020-5 failed because HART counsel advised the board that it needs eight votes to take any action because its five nonvoting members are counted toward what’s considered a 14-member board. (The HART board has been stuck in this quagmire for a number of years. An amendment to the Honolulu City Charter that would have rectified the situation was shot down by voters two years ago.)

Robbins and his staff have fought to keep the public-private partnership (P3) procurement process alive even though Mayor Kirk Caldwell, who is supposed to be an equal partner on the process, withdrew his support of the plan in August.

It’s unclear exactly what happens now, although Robbins indicated that he and his staff will continue talking to P3 bidders in an effort to get more information by the second week of November, then try to work on a possible resolution with the bidders and come up with a recommendation that would be amenable to the board, Caldwell, the City Council and, in December, the Federal Transportation Administration.

Looming large over the discussion — and the decision about whether to ditch the P3 process — is that $250 million in federal funding for the project is supposed to lapse at the end of the year. Part of a promised $1.55 billion contribution that was to be contingent on the city building a 20-mile, 21-station line from East Kapolei to Ala Moana Center, it’s about half of the roughly $744 million not yet released by the FTA that will go away unless HART and the city administration can satisfy the FTA that it has a viable overall project financing plan, or have it allow an extension.

The city administration, regardless if the term-limited Caldwell is mayor, is supposed to be in lockstep with HART on the financial plan because while HART is tasked with building the project, it’s the city Department of Transportation Services that has kuleana over operations and maintenance. The P3 proposal calls for a private partner to build not only the last four miles of guideway and a major parking lot and transit center at Pearl Highlands, but also to oversee the line’s operations and maintenance for 30 years.

Robbins said he wants until mid-November to continue talking to the bidders to see whether some kind of agreement could be reached with one of them or, short of that, gain more information about the details of their plans to get a better fix on costs as the city prepares its new financial plan with the FTA.

He presented to the board a preliminary “stakeholder engagement plan” detailing a timeline showing how he would proceed with the HART board, mayor’s administration, Council and other stakeholders to see whether they could all come to an agreement by early December with a plan that could then be taken jointly to the FTA. That plan could apply with or without a P3, he said.

State Senate Transportation Chairwoman Lorraine Inouye and West Oahu area Sen. Kurt Fevella, via live teleconferencing testimony, backed Robbins’ position on continuing the P3 process. They also urged board members to retain Robbins, whose contract is up at the end of the year.

Meanwhile, Caldwell again urged the board to instruct Robbins to stop the P3 process immediately. His administration announced in August that it was withdrawing from the P3 process and, while procurement proceedings are private, has suggested that the bids are expected to come in too high to be feasible.

Voting for the bill were members state Transportation Director Jade Butay, city Transportation Services Director Wes Frysztacki, Ford Fuchigami, Glenn Nohara, Joseph Uno, Hoyt Zia and board Chairman Toby Martyn.

Voting against were board Vice Chairman Terrence Lee and member Kika Bukoski.

Nonvoting members are Michele Chun Brunngraber, Dean Hazama, Lynn McCrory and city acting Planning Director Kathy Sokugawa.

After the vote, Zia tried to seek clarification from Robbins on what he intended to do, given that a majority of the board did not want him to proceed.

“Seven out of nine voting members have said they want to cancel this,” Zia said. “Now, we can’t order you to do it because we couldn’t pass a resolution. But if seven board members out of nine say cancel it, what are you going to do? What do you take from that?”

Robbins was vague. “I wish the board had more information,” he said, reiterating that he and his staff have been working on the P3 procurement with bidders and potential bidders for two years.

“We’re not quite done yet,” Robbins said. “After we have these discussions, these meetings with them, we’d like to finish our analysis; we can make a professional recommendation to you, the board, as well as to the city.”

He insisted that contrary to Caldwell’s argument, scrapping a P3 negotiation now might add more delays to the project schedule.

“Each of these teams has spent millions of dollars largely at their own risk, and we’re concerned who would come back if we had to start the process all over again and ask these firms and other firms to spend more money on yet another pursuit here in Hawaii … and we’re concerned about additional time delays finishing a new procurement and the uncertainty that will bring.”

Martyn, who’s been board chairman for about a year, said he’s always been skeptical about the P3 funding plan. Not only was the project already half built, but the city already had an existing operations contract, he said.

“We also had the fact that this project had encountered continued delays in schedule and cost issues which were well publicized,” Martyn said.

“My feeling from the start was we had absolutely no leverage in trying to maximize value through this procurement strategy,” he said. “And, in fact, I believe we were putting the city and HART at risk by going through a procurement strategy that we knew nothing about, that we had to spend tens of millions of dollars getting up to speed on through the hiring of very expensive consultants and attorneys.”