City officials are requesting that over $210.5 million in general obligation bonds be used to subsidize ongoing construction of the
Honolulu Authority for Rapid Transportation’s rail project, now known officially as Skyline.
During a Honolulu City Council Committee on Budget meeting Tuesday, the city advanced three related resolutions — 122, 124 and 125 — requesting the Department of Budget and Fiscal Services to issue and sell a series of general obligation bonds toward finishing the nearly $10 billion, 18.9-mile rail line, which runs from East Kapolei to the Kakaako area, where HART says the last of 19 stations is planned to be completed by 2031.
Typically, local governments use the bonds to fund large-scale capital projects, including those related to transportation. To that end, the bonds work as loans whereby the city promises to repay the principal and pay the interest on the certificates based on its authority to tax the population.
Under Resolution 122 the city is requesting up to
$20 million to continue HART’s construction of the line in the current 2023 fiscal year, which ends June 30. Out of this request, the city says the amount to be granted to HART would be $17 million.
“Our underwriters recommend adding a cushion over the par amount,” Budget and Fiscal Services Director Andrew Kawano told the committee. “So the amount that we had to borrow was $17 million because we’re selling bonds to the public, and because of the current situation in the market, they recommend that we ask for a little more in case we have to sell the bonds with a premium.”
Kawano noted the additional $3 million connected to the general obligation bond request might eventually go toward other city projects “to the extent that we have appropriations that we have to fill.”
”We will only forward
$17 million to HART,” he said.
Resolution 124 requests up to $15 million in general obligation bonds to pay for HART construction in the upcoming 2024 fiscal year, which begins July 1. Of that amount, $12 million would go to the rail agency, according to Kawano.
The third bond request is for over $175.5 million, meant to refinance capital costs associated with bonds first issued in 2019 for HART’s construction effort.
“These bonds in series E2019 are subject to a ‘put option’ that would require, at the end of September, a payout by the county if the bonds are not fully executed,” Kawano said, noting the requested action would be beneficial to the city. “We have the ability to call the bonds for refinance that will actually lower the interest rate, which is a positive.”
During public comment, resident Angela Young said that use of the general obligation bonds would support development of Skyline and its accompanying stations being built toward the city’s urban core.
“So it’s important to get the money to reflect the needs of HART,” she said.
In the end, all three resolutions were reported out for possible Council adoption. The full Council holds its next meeting July 12.
On June 9, HART officially transferred 10.75 miles of guideway, nine stations, the 43-acre Rail Operations Center and Maintenance and Storage Facility, and 12 four-car trains to the city’s Department of Transportation Services. A week later the city announced the new rail would be named Skyline — a reference, in part, to the expansive views riders aboard the city’s elevated train
system will see along the West Oahu corridor.
Meanwhile, Honolulu is getting ready to launch the first phase of Skyline’s run — from East Kapolei to Aloha Stadium — and will officially begin interim passenger operations on the line at 2 p.m. June 30. That planned grand opening celebration at the Halawa rail station will feature dignitaries and entertainment slated for earlier in the day, according to the city.
