The city’s troubled $10 billion rail project faces another critical vote today in the Honolulu City Council.
Bill 34 authorizes the use of general obligation bonds and bond anticipation notes for construction of the 20-mile line from East Kapolei to Ala Moana Center.
The Honolulu Authority for Rapid Transportation needs the bond proceeds to ensure cash is available for the project, which has been running short because construction costs are outpacing revenues.
While the situation is essentially a cash flow issue and not tied to the larger, long-term budget deficit that the project faces, it nonetheless provides an opportunity for rail opponents to again try to snuff it out.
If the city does not issue bonds for the rail project soon, the project will run out of money in January, HART Chief Financial Officer Robert Yu told the board at its most recent meeting last month. That’s despite the general excise tax funding continuing to trickle into the project’s coffers through 2027.
The outcome of the vote before the Council today is far from certain. The Honolulu Charter requires six of nine Council members — instead of the standard majority of five — to vote to approve a bond-related measure on its final reading. At its second-reading pass before the full Council on April 26, Bill 34 advanced by a 5-4 vote. In favor were Ikaika Anderson, Brandon Elefante, Joey Manahan, Ron Menor and Kymberly Pine. Opposed were Carol Fukunaga, Ann Kobayashi, Ernie Martin and Trevor Ozawa.
Manahan, who heads the Council Budget Committee, said he and his staff are “trying to impress upon the members the importance of this vote.”
Even if Bill 34 is approved, HART will need to return to the Council in the next month or two for approval of the actual bond sales, Manahan said. Such a bill would also need six votes on final reading.
Approving the bill today is also urgent because the city wants to send a strong message to the Federal Transit Administration that it wants to keep its commitment to build the project under a Full Funding Grant Agreement that gave the city $1.55 billion for construction, Manahan said. The city sent a recovery plan to the FTA on April 30 and is awaiting the agency’s response.
With the cost estimate for the project growing dramatically in recent years — to $10 billion from $5.26 billion in 2012 — the FTA has demanded a recovery plan explaining how the city expects to pay to complete the line.
Mayor Kirk Caldwell also urged Council members to support the bill.
“The Council needs to authorize the issuance of bonds, or we cannot float those bonds and get the money we need to continue to build rail,” Caldwell said.
“We’re talking about floating bonds just to get to Middle Street,” the mayor said. “This is not the last 4.8 miles from Middle Street to Ala Moana Center.”
Like Manahan, Caldwell said approving the bill would show the FTA “that we’re committed to completing this project.” The recovery plan submitted in April “has one gigantic puka: There’s no money there yet,” he said. “We don’t want to send this message now that the Honolulu City Council does not have sufficient support in terms of issuing of bonds to complete the project just to Middle Street. It would be the wrong message to send to Washington.”
City officials had hoped that the state Legislature would approve a 10-year extension of Oahu’s half-cent GET surcharge during its regular session. Instead, the House and Senate could not come to an agreement on additional funding for the project, leaving city officials to hope a special session will be convened to address the situation.
Caldwell refused to speculate on what will happen if the Council rejects the bond authorization. “We’re very hopeful we’ll find a sixth vote, and perhaps a seventh vote, to get it passed.”
The Council has twice previously voted via resolution to support GET to get to Ala Moana, Caldwell said.
HART interim Executive Director Krishniah Murthy was unavailable for comment Tuesday.
HART Board of Directors Chairman Damien Kim said he will be at today’s meeting to support the bill, but also declined to say what will happen if it is voted down. “We’re hoping they’ll support our ask,” Kim said.
Star-Advertiser reporter Marcel Honoré contributed to this report.
Correction: An earlier version of this story said Mayor Kirk Caldwell sought a 5-year extension to the general excise tax surcharge. He actually proposed a 10-year extension.
