The Honolulu Authority for Rapid Transportation’s board of directors Friday approved a recovery plan for Oahu’s rail system that ends the route in Kakaako and delays construction of a Pearl Highlands parking garage.

The plan truncates a 20-mile route to 18.75 miles, decreasing the cost of the beleaguered project from about $11.3 billion to $9.93 billion, officials said.

Substantial cost overruns and construction delays have plagued the planned rail system, which was originally slated for West Kapolei to Ala Moana Center.

The Federal Transit Administration pledged $1.55 billion for the project, provided benchmarks were met. But the federal agency has not yet provided $744 million, giving HART until June 30 to establish an acceptable recovery plan to retain the funds.

The new plan stops construction two stations short near the Circuit Court at South and Halekauwila streets in Kakaako.

In addition to shortening the route, the recovery plan eliminates a garage with 1,600 parking spaces in Pearl Highlands, a decision made due to the high cost of construction materials.

One of the new funding sources HART cites in the recovery plan is the city transient accommodations tax, which was implemented in December. It levies a 3% tax on all gross rental proceeds from establishments such as vacation rentals, hotels and timeshares. A third of that new tax will go to the rail project. According to the city’s projections, it expects to collect about $75 million in TAT with about $25 million of it going to HART.

City Department of Transportation Services Director Roger Morton said that the shortened route would create a projected drop in rail ridership to about 84,000 from about 100,000.

The recovery plan also lays out a payment structure for the FTA to deliver the rest of the money, releasing $250 million in 2023, $250 million the following year, and $244 million the third year.

However, HART CEO Lori Kahikina said that if the FTA were to give the full $744 million at once, it would save the project about $130 million in financing costs.

HART is on a tight deadline to get the recovery plan to the FTA because it now must also be approved by the Honolulu City Council. Although several board members brought up issues with the presented plan, it was ultimately passed given the time frame.

Board member Natalie Iwasa said she was concerned about the increase in electricity costs and the lack of a plan to address sea level rise. “I’m very concerned overall that this plan has too many things that are questionable in my mind,” she said.

After hearing the issues raised, board member Mark Howland asked whether the vote could be postponed for 10 days. “These things need to be corrected,” he said. “We don’t need to take an action on something that’s incomplete.”

However, to meet the June 30 deadline, the plan needs to be sent to the Council ahead of a May 24 Transportation, Health and Sustainability Committee meeting. Board Chair Colleen Hanabusa said she did not think that there would be enough time to submit it to the Council for the required public notice if the board vote wasn’t held until May 17.

As a compromise, board members amended the language to call it a draft 2022 recovery plan, passing it on to the Council in a 7-1 vote. Howland voted against it.

Kahikina said she did not think that the FTA would immediately approve the plan if it passes the Council.

“We’re still working out the numbers when they did their risk refresh,” she said. “What a risk refresh means is, contingencies and unforeseen unknowns is what they want to call it. So, we have a certain number, they have a certain number.” There might be some back and forth before an agreement is reached, she said.

However, Kahikina was optimistic that the negotiations would not take long.

“They’ve been hand in hand with us all the way up to the end,” she said. “So I think once we can get an agreement on that gap, I think it’ll be very quick.”

“If they want to make changes, then we go ahead and make the changes. And yes, it goes back through the (board and Council approval) process again, but at least we’ve met that June 30 deadline,” she said. “We’ve met the initial deadline from FTA.”

If the recovery plan is heard and approved by the Transportation Health and Sustainability Committee on May 24, it goes before the full Council on June 1.