Update on the Honolulu Rail Project

The Honolulu Authority for Rapid Transportation, which oversees the rail project, is requesting that the Honolulu City Council allow them to borrow hundreds of millions of dollars in bonds leveraged against the city's general fund to help pay for the project.  While this had always been a part of the financial plan to build the rail project, recent news that the project faces a $500 million to $700 million budget shortfall has left City Council members uneasy if the rail project will ever be able to pay them back. Ann Kobayashi, the city Budget Chairwoman, stated, "I've been told so many things, and many of them untrue, and there's been so many changes so I just want to make sure. We're asking every taxpayer in our city and county to be co-signers of this loan."

Rail official have been reluctant to provide even a general estimate or range of how much they think the project will need to borrow over the total course of construction. Councilman Ron Menor questioned, "When can we get more specific information? What assurances or safeguards are there that the city would not eventually be put in a situation in which real property tax revenues are required to pay back the loans instead?"

The City Council plans to delay any decisions until at least February.

Source: Honolulu Star Advertiser, 1-15-2015, www.staradvertiser.com
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City Council Still Supports Rail Project But Wants More Oversight

The Honolulu City Council has stated that they still fully back the Honolulu Rail Project, but are demanding that more oversight be put into place, due to a recent announcement that the project will cost between $550 million to $750 million more than anticipated.  Ernie Martin, the council chairman, stated, "We are well aware of the financial challenges looming ahead, but this project is crucial for the future sustainability of Oahu." Martin added that the state's largest public works project must be done "in a fiscally responsible manner" and be completed by 2019, its scheduled completion date.  Martin commented, "Let's put it this way. The honeymoon is over. It's inevitable that we're going to do rail, but I think the general public's concern is to, wherever we can, curb some of that cost."

Opponents of the Honolulu Rail Project are concerned that the general excise tax surcharge may be extended beyond 2022 to pay for the increased costs.

Source: Honolulu Star Advertiser, 1-3-2015, www.staradvertiser.com
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Frustration Increases for Over Budget Rail Project

Hawaii residents and legislators alike expressed their frustration toward the Honolulu Authority for Rapid Transportation who recently broke the news that the Honolulu Rail Project is now expected to cost between $550 million to $700 million more than the $5.26 billion estimated.  Daniel Grabauskas, the executive director for HART, commented that project delays caused by lawsuits by rail opponents, pushed the cost up by as much as $190 million, and higher then expected construction contract have attributed to the rest of the unforeseen expense.  In addition, the city has received $41 million less than what was previously project from the general excise tax surcharge that was expected to pay for the bulk of the Rail Project.

Ann Kobayashi, the Honolulu City Council Budget Chairwoman, suggested that it might be time for HART officials to consider scrapping plans for a rail project, and instead allow buses, instead of trains, to travel exclusively along the 20-mile guide way from East Kapolei to Ala Moana Center. Kobayashi argued that this might be a cheaper alternative, and would eliminate the need for park-and-rides to be built along the rail line.  Grabauskas replied that under the funding agreement with the Federal Transit Administration,"we are not allowed to change our plans mid-stream from a rail transit system to one using buses. To switch from steel-on-steel rail technology to buses using rubber tires, we would have to return the existing federal funding and reapply for the money."

Source: Honolulu Star Advertiser, 12-20-2014, www.staradvertiser.com
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Rail Project Expected to Be Over Budget

The Honolulu Rail Project is now estimated to be between $550 million to $700 million more than originally planned.  Members of the Honolulu Authority for Rapid Transportation blamed the booming construction market to be the major source of the problem, and noted that construction companies came in with higher bids than what was anticipated.  At this point, 40 percent of the work has yet to be contracted out, making critics of the Rail Project extremely nervous as to what the final price tag will be.

The city has several options to raise the additional money needed to complete the rail project.  The first option is to attempt to extend the 0.5 percent general excise tax surcharge past its 2022 expiration date.  Another suggestion was to divert more than $200 million in federal funds currently used to support the city's bus system.  Finally, rail officials are suggesting splitting the work into smaller contracts, hoping that construction companies will offer more competitive bids.

Source: Honolulu Star Advertiser, 12-19-2014, www.staradvertiser.com
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Urban Landowners Unhappy with HART Land Acquisition Team's Communication

The Honolulu Authority for Rapid Transportation will need to purchase a total of 230 parcels of land along the route from Kapolei to Ala Moana Center to build the Honolulu Rail Project.  So far, HART has managed to purchase 68 properties, primarily in West Oahu, which represents 71 percent of the total area needed.  However, as the project moves closer toward urban Honolulu, a lot of the properties being looked at are owned by either private businesses or individuals, and these landowners are expressing their frustration at the lack of information as to how the Honolulu Rail Project would affect them specifically.

HART had previously stated that one of the main goals of the acquisition team would be to "continue to communicate and educate effectively" the landowners and communities where the rail project would pass through.  However, landowners state that they have been getting conflicting information every few months as to how much land HART will need to acquire, when HART would need it by, and what the compensation amount would be.

Dan Grabauskas, the chief executive officer for the Honolulu Authority for Rapid Transportation stated, "If there's been a lack of communication for some folks, we'll step it up. We are doing our utmost to work cooperatively with property owners and to accommodate them whenever possible as we move forward to try to build the project. We realize it's a balancing act because we do need to make sure that we maintain schedule and keep within budget, and those two are sometimes competing interests and we attempt to do our best to walk that line."

Source: Honolulu Star Advertiser, 9-28-2014, www.staradvertiser.com
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Honolulu Rail Project to Solicit New Bids to Build Rail Stations

The Honolulu Authority for Rapid Transportation (HART) has stated that they will not be accepting any of the three bids that they had received last months to build the first nine rail stations, because all of them were more than $110 million more than what they had expected.  Instead, HART has decided to break up the building of the first nine rail stations into three small bids of three stations each.  This change may delay the opening of the initial 10-mile stretch between East Kapolei and Aloha Stadium, but Daniel Grabauskas, the Chief Executive Officer for the Honolulu Authority for Rapid Transportation felt that they could save $20 to $30 million by postponing the opening by a year, residents would be happy. Grabauskas believes that by breaking up the nine rail stations into three bids of three rail stations each, the total of the projects will come in at less than $294 million, which was the lowest bid previously submitted for the first nine rail stations.  The agency had initially budgeted in $184 million for the first nine stations.

Daniel Grabauskas added, "We have decided that it is in the public's best interest to cancel this solicitation and redesign the bid in order to reduce risk to the contractors and thereby reduce costs. I would hope that they would see this as an opportunity to do the right thing and let us go forward with some changes that are going to drive down costs." The Honolulu Rail Project has a contingency fund of $550 million remaining, but this is expected to cover all unexpected costs.

Source: Honolulu Star Advertiser, 9-10-2014, www.staradvertiser.com
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Honolulu Rail Project - Construction Bids Much Higher than Anticipated

The Honolulu Authority for Rapid Transportation (HART) which oversees the Honolulu Rail Project, had budgeted $184 million, including contingency dollars, to build the first nine rail stations which would run from Kapolei to Aloha Stadium.  However, when they unsealed the bids from three local construction companies, the lowest one, from Nan Inc., came in at $294.5 million.  The other two, from Nordic PCL and Hensel Phelps came in at $312.3 million and $320.8 million respectively. Shocked by these much higher than anticipated construction costs, rail officials are uncertain if they will be able to deliver the entire project on budget.  Don Horner, the Vice Chairman for HART stated, "Clearly our estimates right now are suspect."

Dan Grabauskas, the Executive Director for HART blamed the fact that recent legal challenges halted constructed for more than a year.  Grabauskas believes that the construction market has shifted, and as a result companies can charge more money.  Regardless, it is unclear how much all of the construction projects will costs, and where the money to complete the rail project will come from.  HART had set aside $563 million for contingencies, but that amount is quickly being eaten away

Source: Honolulu Star Advertiser, 8-15-2014, www.staradvertiser.com
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Honolulu Rail Project Will Go Through Middle of Honolulu International Airport

The Honolulu Authority for Rapid Transportation (HART) has announced that the Honolulu Rail Project will now go directly through the middle of the Honolulu International Airport and will be able to pick up and drop off thousands of passengers and airport workers there.  While it had been previously announced that the rail would stop at the airport, its exact location was still up for debate, and many worried that the station would be located several blocks away.  The station will now be between the airport's international and overseas parking structures, in easy walking distance to the main terminals.  Mayor Kirk Caldwell praised the location and stated, "They know they're going to arrive at the airport quickly, reliably and on time, with their luggage. I think the station is going to be bringing a lot more to the airport experience."

The Honolulu Rail Project will go from Kapolei to Ala Moana Center, which is a short distance from Waikiki.  City officials added that once the rail project has been completed, they would add additional buses from Ala Moana Center to Waikiki to make the rail viable for tourists visiting Oahu.

Source: Honolulu Star Advertiser, 7-17-2014, www.staradvertiser.com
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Honolulu Rail Project May Use Eminent Domain to Acquire Properties in Honolulu

The Honolulu Authority for Rapid Transportation (HART) needs to purchase a total of 146 full or partial properties along the path of the Honolulu Rail Project. Currently, the city has spent $61 million to purchase 67 properties west of Honolulu.  While in most cases, owners and business in the city of Honolulu itself are willing to cooperate with HART, there have been some challenges, especially with the need to build the rail in such a tight time frame. This means that eminent domain may be used to acquire the properties.  Dan Grabauskas, the executive director of HART, stated, "We won't hold up the project. If our negotiations haven't gone to where they need to be, or aren't going in the right direction, then we may concurrently file for eminent domain."

Under city and state law, when the government needs to build large public works projects such as a new highway, or in this case, the government has a right to acquire any private properties in its path.  The government is then required to give "fair compensation" to the owner, but what is fair to the government may not be considered to be fair by an individual.  HART has announced that they have already contacted all of the property owners whose land may be affected and are will be entering discussion with all of them shortly.

Source: Honolulu Star Advertiser, 6-20-2014, www.staradvertiser.com
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Live Work Play Aiea Redevelopment Moves Forward

Honolulu Mayor Kirk Caldwell has signed Bill 68 into law, which will pave the way for the proposed Live Work Play Aiea project.  Live Work Play Aiea, which is being developed by Robertson Property Group, hopes to create as many as 1,500 residential units in a five-tower development at the site of the Kamehameha Drive in near Pearlridge Center. The $766 million project will be located next to one of the major hubs of the $5.26 billion Honolulu Rail Project.

Under the agreement with the city, the developer must place a minimum of 30 percent of its residential units in the affordable-housing category.  Furthermore, at least half of the affordable units must be on the project site. The rest can be spread out within a half-mile radius of the Pearlridge station or within and of the other transit hubs planned along the 20-mile route of the Honolulu Rail Project.  Bill 68 allows for three of the five towers to be as tall as 350 feet, 300 feet and 250 feet respectively. The last two towers are restricted to 150 feet.  This is a significant increase from the current zoning which limits the entire area to just 60 feet.

Source: Honolulu Star Advertiser, 5-2-2014, www.staradvertiser.com
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Honolulu Rail Project Update - Tax Surcharge to Continue Forever?

In 2005, state of Hawaii and Honolulu City Council Lawmakers passed a law creating a 0.5 percent general excise tax (GET) surcharge for the entire state of Oahu to help pay for the Honolulu Rail Project.  Collection for the surcharge started in 2007, and to date, approximately $1.2 billion has been gathered.  Under the current law, the 0.5 percent surcharge will end in 2022 and would have raised approximately $3.4 billion during that time. Now some lawmakers, including Honolulu Mayor Kirk Caldwell are suggesting to continue collecting this amount forever.  Caldwell stated, "If it goes in perpetuity, it would be applied to operation and maintenance of the rail system, along with our bus system."

It is estimated that once completed, the operation cost for the rail system will be over $110 million per year.  The concern is how the rail project will pay for this amount once the tax surcharge goes away in 2022.  Honolulu City Council's Budget Chairwoman, Ann Kobayashi, commented, "If it did not have a sunset date, I would not have voted for it (in 2005). I assumed that that was all the money that was necessary.  I just don't know. I just have to trust them, what they tell me, that it's going to be on time and on budget and that the operations will be covered by ridership and whatever else."

Source: Honolulu Star Advertiser, 4-6-2014, www.staradvertiser.com
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Construction Industry Forecast to Have Strong 2014 and 2015

The state Department of Business, Economic Development and Tourism has predicted that the construction industry in Hawaii will create an additional 5,000 jobs over the next two years. Overall, DBEDT predicts a 12.4 percent increase in construction spending in 2014 and a 8.3 percent increase in construction spending for 2015. The construction industry was one of the hardest hit by the 2008-2009 recession and has taken a long time to turn around.  Since 2012, the island of Oahu has already begun to see some progress, but the neighbor islands have not seen much demand.  Oahu will get an additional boost in the coming years thanks the the Honolulu Rail Project and the redevelopment of the Kakaako neighborhood.  John White, the executive director of Pacific Resource Partnership, stated that the construction industry is ready to build homes to help solve the anticipated housing shortage in Hawaii.  White commented, "If we don't build these homes, more and more residents will be forced to leave Hawaii because they cannot access housing they can afford. We're grateful for the opportunity to get our members back to work, but we're mindful that we must grow in a balanced way, to build housing and create jobs, but protect the open spaces and places in Hawaii that are important to all of us."

Source: Honolulu Star Advertiser, 2-21-2014, www.staradvertiser.com
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Major Court Wins for Honolulu Rail Project

Two major victories in federal court will mean that the Honolulu Rail Project will proceed as planned.  At a federal court in Hawaii, Judge A. Wallace Tashima ruled that transit officials had followed proper procedures in choosing a rail route to Ala Moana Center instead of a route to the University of Hawaii's Manoa campus.  At a federal appeals court panel, a panel of three judges ruled unanimously that the route did comply with environmental law. Opponents of the Honolulu Rail Project have stated that these court decisions would bring their legal fight to an end.  Retired businessman Cliff Slater, who has been an opponent of the rail project from the beginning, commented, "Our preliminary decision is that there is little likelihood of prevailing in any further legal action. Therefore, today's rulings conclude our legal fight.  We didn't leave any stone unturned."

Rail supporters and members of the Honolulu government are delighted by the news.  Donna Leong, member of the Honolulu Corporation Counsel, stated, "It's now time to get on with the transit project to provide mobility to those who need it and to complete the rail on time and on budget."

Source: Honolulu Star Advertiser, 2-19-2014, www.staradvertiser.com
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Honolulu Rail Project to Redesign Maintenance Storage Facility

Officials for the Honolulu Rail Project have announced that they will be spending an additional $4.25 million to redesign the track operations at the main maintenance storage facility.  The 43-acre facility, located near the Leeward Community College, will have to be reconfigured so that its tracks can support "automated train operations" that won't require workers to manually move train cars around the yard.  There will also be a test track at the facility, additional cabling for the automated track system, a car-unloading dock and more grading and utilities.  Rail officials stated that these changes will make the storage facility safer and less expensive to operate in the long run.  Unfortunately, the $4.25 million that is being allocated will only pay for the costs associated with the redesign and not for the eventual construction costs associated with the changes.  Critics of the project question why the upgrades were not part of the original designs to begin with.

Source: Honolulu Star Advertiser, 2-14-2014, www.staradvertiser.com
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Honolulu Rail Project - Mock-Up of Rail Car on Display at Kapolei Hale

The Honolulu Authority for Rapid Transportation (HART) has announced that a life-size mock-up of the rail cars that will be used for the Honolulu Rail Project are now on display at Kapolei Hale. The model will be available for viewing during regular business hours from now until the end of April for anyone who is interested in seeing what the rail cars will look like.  The building will be also open from 10:00 AM to 4:00 PM on Saturday and Sundays for the public.  The first real rail cars are expected to arrive on Oahu in 2016.  The first section of the rail project is expected to be completed in 2017.

Source: Honolulu Star Advertiser, 2-14-2014, www.staradvertiser.com
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Honolulu Rail Project Legal Update

There are still a couple of lawsuits against the Honolulu Rail Project that are still ongoing that could potentially stop construction.  At the U.S. District Court level, Federal Judge A. Wallace Tashima is listening to testimony from opponents of the Rail Project who are arguing that city officials did not follow procedure when deciding that the Ala Moana Center should be the final eastern station for the rail line.  According to Honolulutraffic.com, an anti-rail coalition, the original intended route was supposed to take the rail from Kapolei to the University of Hawaii-Manoa campus.  Honolulutraffic.com further believes that rail officials were not impartial in their decisions to place the rail route along its current path and did not properly investigate alternative routes.

Rail officials have stated that the route to the University of Hawaii-Manoa campus would have cost an additional $960 million as opposed to going to Ala Moana Center. Honolulutraffic.com attorney Nicholas Yost stated that this argument by rail officials is a fallacy as the purpose of the rail project was to end at UH Manoa.  He suggested comparing the $960 million amount in question to how much it would cost to extend the the rail system from Ala Moana Center to UH Manoa.

There is currently an injunction by Judge Tashima that stop rail officials from property acquisition and most construction in the heart of Honolulu.  Judge Tashima stated that he will consider both arguments and will make his final decision shortly.

Source: Honolulu Star Advertiser, 2-7-2014, www.staradvertiser.com
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Honolulu Rail Project Making Progress

According to the Honolulu Authority for Rapid Transportation, the island of Oahu can expect to see a lot of progress this year in regards to the building of the Honolulu Rail Project.  Having spent the last couple of years dealing with various litigation issues and forced to stop construction due to the requirement of completing an archaeological survey, rail is back on track.  In 2014, nearly two hundred concrete columns will be placed to support he elevated system and by this summer the first guide way systems will be installed on top of these columns.  HARP warns that there be some traffic delays from lane and road closures.  If they are able to proceed as planned, approximately half of the rail system will open in 2017.  The full rail system should be operational in 2019.

Source: Honolulu Star Advertiser, 2-3-2014, www.staradvertiser.com
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Honolulu Rail Project Audit Completed

PKF Pacific Hawaii LLP conducted an independent audit for the Honolulu Rail Project up until June 2013. According to officials with the firm, all of the money was accounted for, but the rail finance officials had failed to properly record $83.8 million in federal funding.  Chief Financial Officer for the Honolulu Authority for Rapid Transportation, Diane Arakaki, confirmed that the money was not missing, but rather there was simply a "recording error".  Arakaki stated that a full-time federal grants manager will be hired by HART to make sure that issue would not happen again.

Source: Honolulu Star Advertiser, 11-25-2013, www.staradvertiser.com
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Honolulu Rail Project To Receive $63.8 Million from General Excise Tax Revenue

The Honolulu Rail Project is expected to receive $63.8 million from revenue earned from the state's general excise tax during the third quarter of 2013.  According to officials from the Honolulu Authority for Rapid Transportation, which is significantly higher then what was expected thanks to improving economic conditions in the state.  Executive Director for HART, Dan Grabauskas, stated, "Strong GET surcharge revenue coupled with the $1.55 billion in federal funding that we secured last year is keeping us on the right track to deliver the project on budget."  The project is expected to cost $5.26 billion in total, with the GET surcharge paying for 70 percent of the amount and federal funding paying for the remaining 30 percent. The rail project is expected to be completed in 2019.

Source: Honolulu Star Advertiser, 10-29-2013, www.staradvertiser.com
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Honolulu Rail Project Officials Believe They Have Complied With All Federal Judge's Instructions

Honolulu Rail Project officials have filed in federal court that they have complied with all of Judge A. Wallace Tashima's instructions. About a year ago, Judge Tashima ordered the Honolulu Rail Project to be halted until alternative routes and impacts to the city could be studied.  Now, Judge Tashima would have to review the findings, and if he accepts the city's "notice of compliance" would lift his order to block construction in the heart of Honolulu.  Honolulu Mayor Kirk Caldwell, stated, "We've now met the conditions set by Judge Tashima. Their day in court has happened. Let the project continue."

There is still a federal suit against the rail project that is being reviewed by a panel of three judges on the 9th U.S. Circuit Court of Appeals.  Ultimately, the decision made by the Appeals court could decide if the city would be allowed to go forward with the $5.26 billion project.

Source: Honolulu Star Advertiser, 10-9-2013, www.staradvertiser.com
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