While private money will never pay for a significant part of Honolulu’s stalled rail project, having the private sector shoulder more of the risk might result in a quicker, less costly finish, according to a new report.

The analysis, released Monday by the Hawaii-based social investment fund Ulupono Initiative, further found that stopping the project while local leaders decide what to do about it could cost the state’s taxpayers about $114 million a year.

“Kicking the can down the road is a very expensive proposition,” said Jill Jamieson, a managing director with the Chicago-based investment management firm Jones Lang LaSalle, which did the analysis for Ulupono. “Delaying a decision is not in anybody’s best interest.”

JLL’s report does not take a position on whether to extend the general excise tax, tap property taxes or use some other revenue stream, but it did recommend that policymakers issue a “timely decision” on which public dollars to use.

The analysis comes as the Legislature considers a bill that would at least partially address rail’s current budget gap of roughly $3 billion. Meanwhile, amid this latest financial crisis for the project, some critics have called for a pause to reassess the most prudent approach forward for rail.

Jamieson said taxpayers would benefit if the city used private third parties to pay for the project’s final four miles into town plus a major transit hub at Pearl Highlands as that work occurs. Under that model, known as “design-build-finance,” the private investors wouldn’t be paid back until the project is finished, according to JLL’s report.

Such a model has been used to complete other major infrastructure projects in North America, including the Evergreen rapid transit extension in Vancouver, British Columbia, Jamieson said Monday. Design- build-finance provides an added incentive for the third parties financing the work to control costs and deliver the project as soon as possible, she said.

“It changes their behavior; they want to finish quickly,” Jamieson said of such large, private financiers. Rail’s opening currently faces a six-year delay, to start running in December 2025. Independent overseers have questioned whether that date is realistic.

The model further allows taxpayers to pay for the system once they start to benefit from it — instead of paying while they endure the construction, she added.

Taxpayers would still pay for virtually all of the rail project, just at a later date. The project has to rely on public funding because it was never designed to pay a financial return on the nearly $10 billion investment, the report said.

Jamieson said there’s a market for the design- build-finance approach.

“There’s more money sitting on the sideline looking for projects right now than we have projects in the United States,” she said.

However, Honolulu Authority for Rapid Transportation representatives said they’ve previously discussed the idea with private finance firms but didn’t get any follow-up interest.

Ulupono’s analysis is “something to look at and consider,” but design- build-finance could also have pitfalls, HART spokesman Bill Brennan said Monday. Such deals can be difficult to negotiate with no guarantee that the final contract will reflect that model, he said.

Furthermore, if delays will cost $114 million annually, it might not be worth pursuing if the talks take too long, he added.

Rail consultants have told project leaders that design- build-finance “would’ve worked from the beginning,” when construction started, but “building it midstream now is difficult because of all the existing issues,” said HART board Vice Chairman Terrence Lee.

Nonetheless, Ulupono representatives planned to present their findings to Rep. Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu) and other state legislators at the Capitol this week.

HART and the city face an April 30 deadline to submit their recovery plan for rail to the Federal Transit Administration or risk losing some $1.55 billion in federal funding. Luke, chairwoman of the state House’s powerful Finance Committee, has said the April 30 deadline won’t pressure legislators to make what they believe should be the best choice.

“What’s between FTA and the city, that’s between them,” Luke said recently. The state general excise tax remains the largest source of rail funding, and “I’m not very swayed by the FTA’s timeline,” she said.

A bill moving in the state Legislature to help address rail’s $3 billion funding gap would provide the city about $300 million over the next decade, but it wouldn’t give city leaders the GET extension they want.

During recent hearings, rail critics frustrated with the project’s nearly $10 billion price tag have encouraged state lawmakers to continue to withhold any extension, arguing that the move would force the city to better control costs.

Jamieson said that Oahu’s elected leaders could find a deal that holds the city accountable on rail while ensuring the transit project can proceed.

Executive summary of the Honolulu Rapid Transit Project by Honolulu Star-Advertiser on Scribd