Mayor Kirk Caldwell: Rail cost now $11B, won’t be completed until 2033

Honolulu’s financially troubled rail project will cost up to $1.1 billion more and not be completed until 2033, eight years longer than now projected, according to estimates that are part of a preliminary plan Mayor Kirk Caldwell and other city officials sent Friday to the Federal Transit Administration.

While the letter itself does not state specific figures, it effectively projects a total cost of up to $10.2 billion, not including about $1 billion in financing costs. Only a month ago, staff with the Honolulu Authority for Rapid Transportation had revised its estimate to $9.1 billion, before financing, from its previous forecast of $8.3 billion.

Caldwell’s seven-page letter, co-signed by HART Chairman Tobias Martyn and City Council Budget Chairman Joey Manahan, asks the FTA to give the city another year to come up with a financing plan before it decides to cut off the city from $250 million in federal grant money that’s set to lapse at the end of this year.

The letter bypassed HART Chief Executive Officer and Executive Director Andrew Robbins, who has been at loggerheads with Caldwell, Manahan and a majority of his board members over how the project should proceed. Robbins’ contract is up at the end of the year, and indications are that the board will not renew it.

Robbins and HART staff came up with their own “Plan B” late Tuesday afternoon that suggests a lower total price tag and shorter timetable for completion, but their letter does not show specific numbers in the redacted version provided to the Honolulu Star-Advertiser.

The $250 million is part of a $744 million allotment in promised funding FTA officials have been withholding until they are satisfied the city has a clear plan to complete the project.

When the FTA first agreed to provide $1.55 billion for the then $5.3 billion project, it was contingent upon the city building a 20-mile line with 21 stations from East Kapolei to Ala Moana Center.

But it’s become painfully clear to all parties involved, particularly after tax collections began sliding earlier this year due to the economic impacts of the COVID-19 pandemic, that projected tax revenues and costs won’t allow the full project to come in at $8.3 billion the city had promised as part of the most recent funding agreement with the FTA.

Under Robbins’ leadership the city over the last two years had been working on procuring a public-private partnership, or P3, with an entity that would help finish the last four miles of the project, a major transit station and parking garage at Pearl Highlands, and also handle operations and maintenance of the rail line for 30 years.

But after at least one of the P3 bids submitted in July indicated the cost would be much higher than HART had originally budgeted, Caldwell withdrew from participating in the process to secure a partner.

The city and HART were to enter a P3 arrangement jointly because while HART is tasked with building the project, the city is responsible for operations and maintenance.

Subsequently, the HART board voted 7-2 on a resolution to instruct Robbins and HART staff to cease working on the P3 and develop an alternate plan, a vote that failed because board rules require 8 votes to take an action.

But Robbins has persisted, arguing that it makes more sense — both from a financial and time standpoint — to keep the P3 bidders at the table to negotiate a deal. That difference in opinion has further deepened the rift that has pitted the HART chief, his staff and a minority of board members against Caldwell, Council leadership and a board majority.

Caldwell’s letter to the FTA proposes that work continue on the troublesome relocation of utilities along the Dillingham Boulevard corridor while the city seeks bids for a new design-build contractor to construct the line to a station in or near downtown Honolulu.

“By bringing the system into downtown, rail service would provide the opportunity for many more rail riders to get to and from their homes and work, and to connect to other modes of transportation,” the letter said.

A builder for the Pearl Highlands Garage and Transit Center would be procured through a second bid process, Caldwell’s letter said. Construction of the remaining guideway segment — between downtown and Ala Moana — could be done under an independent procurement or could be combined with the downtown work, the letter said.

Caldwell stressed that the projections in his letter were made “without the benefit of the technical expertise and the detailed cost information that is available at HART.”

What’s more, the letter said, city officials cannot determine “with a level of precision that we can rely upon” how much pandemic-related revenue losses might cost the project, or the possibility that additional federal funding may be available.

Robbins, in a 22-page letter sent late Tuesday to city acting Budget Director Manny Valbuena, said, “The HART team requests that the city give the report and HART’s recommendation to complete the project under a phased approach through the existing P3 Procurement all due consideration.”

The key difference in approach the HART staff plan has with the one offered by Caldwell is that it also calls for the project to be completed in segments, but seeks to do so with a single procurement. The Robbins letter is redacted in many sections, indicating the paragraphs involving proprietary bidding that he is barred from releasing due to procurement laws.

Under a phased approach, Robbins’ letter said, “the majority of the costs associated with mobilization, a project office, a management team, and construction equipment would be covered in the base scope but would not be re-priced in subsequent phases as the funding is incrementally certified.”

If the city decides not to rejoin the P3 process, “HART will take immediate steps to cancel the P3 procurement and issue documents for a re-procurement under a design-build procurement process,” the letter said.

Robbins said the Caldwell administration should provide feedback to HART by Friday, when the HART board is next slated to meet.

The City Council Budget Committee, meanwhile, is set to take up the rail funding issue at a special meeting at 10 a.m. Tuesday.

Joint Letter to FTA by Honolulu Star-Advertiser

HART Recommended Path Forward by Honolulu Star-Advertiser