The current administration overseeing the city’s troubled rail project satisfactorily addressed nine recommendations made by the city auditor dating back to 2019 to control cost overruns, delays and other issues, according to a report released Monday.
City Auditor Arushi Kumar reported to Mayor Rick Blangiardi and the Honolulu City Council on Monday that its previous audit of the Honolulu Authority for Rapid Transportation in 2016 found “cost overruns and schedule delays (that) resulted from inexperienced HART managers and contractors who initiated and approved a plethora of change orders and amendments that increased project costs and contributed to schedule delays. We found insufficient justifications and documentation for many contract change orders and amendments.
“We also found that HART lacked internal controls to minimize costs and prevent schedule delays, and ignored or only partially addressed repeated PMOC (project management oversight contractor) warnings about internal controls and schedule impacts.”
The auditor’s office, at the direction of the City Council, began conducting a followed-up audit in 2019 and concluded that:
>> “HART’s contractors fulfilled their obligations in an economical, effective, and efficient manner.”
>> “Expenditures charged to HART by the contractors were valid and accurate.”
>> “HART had implemented the project management and contract administration controls over the contractors needed to prevent cost overruns for the rail project.”
>> “HART addressed the concerns raised, and followed the recommendations made, in our prior HART audit.”
The original plan was to build a 20.2-mile, 21-station route from East Kapolei to Ala Moana Center that ballooned to a cost of $11.1 billion — with a $1.3 billion deficit but no obvious source of money to plug the budget gap.
Lori Kahikina was appointed interim CEO and executive director of the Honolulu Authority for Rapid Transportation in January 2021 and permanent CEO and executive director in January. She became HART’s seventh leader since voters approved the transportation board’s concept in 2010.
In a statement to the Honolulu Star-Advertiser, Kahikina said, “We are very pleased that HART has completed all outstanding recommendations from audit reports issued by the Office of the City Auditor. I am proud of the hard work the HART staff put into this effort and, in turn, for making HART a stronger and more effective, accountable and transparent organization.”
As Kahikina and her administration began cutting staff and contractors and other costs, the HART board gave Kahikina the permanent job in January 2021. In a subsequent positive evaluation, Kahikina then turned down a $25,000 bonus.
Then in March 2022, Blangiardi announced a new, truncated 18.75-mile, 19- station route costing $9.8 billion to build: $9.1 billion in construction costs, plus an additional $650 million in financing.
If approved by the Federal Transit Administration, the new plan to end rail construction at Halekauwila and South streets would assure three years of federal funding that would save about $100 million in financing costs and see construction complete by May 2029, Blangiardi told the Honolulu Star-Advertiser’s “Spotlight Hawaii” livestream program in March.
According to the latest city audit, “We found that since December 2020, HART has reduced the number of city employees from 115 to 52, a 55 percent decrease. Most notably, the number of personal services contract employees declined 57 percent from 101 in 2020 to 43 in 2022.”
And between December 2020 and April, HART further reduced the number of consultants “by 74 percent from 19 to 5 consultants,” according to the auditor’s update.
Kahikina and her team in early 2021 reviewed every HART position, including consultants and contractors, and cut the staff to 64 from 112 full-time equivalent positions, saving $246.7 million.
The personnel cost savings — combined with a “mauka shift” plan to reduce utility line relocation by moving the rail guideway mauka on Dillingham Boulevard — is expected to save the project a total of $914.9 million, according to the auditor’s report.
Correction: An earlier version of this story reported incorrect years for Lori Kahikina’s time at HART.
