Stopping rail at Middle Street might save $440M
It would save the city about $450 million to halt construction of the rail project at Middle Street, according to rail officials.
The cost to construct the complete 20-mile guideway from East Kapolei to Ala Moana is about $9 billion — $8.2 billion plus as much as $858 million in financing costs — Honolulu Authority for Rapid Transportation CEO Andrew Robbins said in a recent memorandum to Honolulu City Councilwoman Heidi Tsuneyoshi.
By contrast, it would cost about $8.6 billion to build the rail line to the Kalihi transit station on Middle Street — about 5 miles short of Ala Moana Center, Robbins said in his memo, which includes a six-page Power Point presentation.
Tsuneyoshi, who’s been pressing rail officials to be more accountable since she joined the Council on Jan. 2, said she’s still reviewing Robbins’ memo but sees it as a good starting point for a much-needed discussion.
HART officials and rail supporters argue against ending the rail at Middle Street because they say cutting off the project from the most populated part of the island would reduce ridership, thereby undermining the system’s effectiveness.
Rail critics, however, cite the dramatic jump in price for what was estimated in 2013 to be a $5.3 billion project. They are worried that the price will only increase as construction moves into the heart of urban Honolulu, where it will encounter more developed areas than it had during its initial 15-mile segment from East Kapolei to Kalihi.
Robbins said the approximately $8.6 billion estimate to build to Middle Street “includes sunk costs in the City Center section of the project alignment that have been paid to date that would not be recuperated.” That would include costs for planning, design, utility relocations and right-of-way purchases, he said.
The estimate does not, however, include potential savings from early termination of existing contracts because “any potential savings would be offset by early demobilization of crews and equipment, disputes, claims, and potential litigation from terminating contracts,” Robbins said.
Also factoring into the Middle Street estimate is $875 million for repaying the Federal Transit Administration for money drawn from a $1.55 billion pot that was promised under a full-funding grant agreement. HART anticipates stopping short of the agreed Ala Moana terminus would cause the FTA to pull back $806 million already drawn as well as interest and penalties of $69 million.
Robbins’ memo also warns that defaulting on the federal agreement could result in the city having “a negative standing with the federal government for decades,” which could negatively affect other federal funding for the city.
Tsuneyoshi introduced Resolution 19-29, which calls for a forensic audit of the rail project to determine whether there was any criminal activity that contributed to the spike in costs. The Council adopted the resolution March 8 shortly after HART officials received three separate federal subpoenas for documents and scathing audits by both state Auditor Les Kondo and then-city Auditor Edwin Young.
Tsuneyoshi told the Honolulu Star-Advertiser the Council needs to have a serious discussion about whether it makes more sense to stop at Middle Street or continue to Ala Moana.
“I think there’s more questions to be asked from what they’re telling me here,” Tsuneyoshi said, adding that she’s not convinced the estimate in the memo reflects all factors. “This is a good place to start the discussion about having all the options on the table to see if, in fact, (proceeding to Ala Moana) is our best option because of all the variables yet to be uncovered about going to Ala Moana.”
While the memo indicated there may be negative impacts to the city reneging on its agreement to stretch to Ala Moana, the city could also experience other problems if it winds up scrambling for cash to reach the shopping center, she said.
Tsuneyoshi said she also still has many questions about HART’s drive to find an entity to form a public-private partnership that would take on the cost of completing construction of the project and then operating and maintaining it for its first 30 years of existence.
“I have questions about the viability of that process (and about) it getting us to the end,” she said, adding she’s also worried that handing over operations to a private party could further expose the city to liability. HART officials have insisted that a P3 arrangement would actually shield the city from more financial costs by handing over the reins to a private interest.
An amendment to the Honolulu City Charter adopted in 2016 requires the city, through its Department of Transportation Services, to be responsible for rail’s operation and maintenance, not HART, so Council members need to be more involved in the process, she said.
Tsuneyoshi said she’s not certain stopping in Kalihi is the right move, but “it warrants discussion now that we have this information on the table about what it would be to stop at Middle Street.”
Current HART projections call for the first segment of the line, from East Kapolei to Aloha Stadium, to be operational by the end of 2021 and the full line, to Ala Moana, to be operational by December 2025.