COVID-19 has thrown a roadblock in front of virtually everything on Oahu, the rail project not the least among these. The expected collapse of the public-private partnership (P3) process certainly upends any hope that the project planners could steer the project close to completion on the current timeline.
It also is compelling the Honolulu Authority for Rapid Transportation to recalibrate what can be accomplished for the foreseeable future. Rising costs coincide with falling tax revenue projections, due to the economic downturn the pandemic has triggered.
The sticker shock for the beleaguered 20-mile project has intensified: In recent weeks, HART board members learned that estimates now push the price total to $10 billion, including about $1 billion in financing costs.
More specifically, the effect on the contract for the final, 4-mile construction segment — from Middle Street to Ala Moana Center — precipitates a major shift in planning, with work to proceed phase by phase, as revenues allow.
It’s undeniably a necessary shift, but HART and elected city officials will need to navigate with care to stay within budgetary constraints while moving ahead toward completion, with Ala Moana Center remaining the ultimate goal.
The near-term approach should be to advance the route as far as possible, at least to the Chinatown district. Stopping at Middle Street would essentially leave Oahu with an enormous white elephant.
Completing the guideway through Dillingham Boulevard and Iwilei will be difficult but it would make the system usable to many more transit riders, including surrounding residential communities. Honolulu Community College and Hawaii Pacific University students coming in from the West Side would be served, and downtown places of work and business will be more accessible as well.
One of the most unsettling parts of all this has been the recent conflicts between the city administration and HART, culminating in a failed attempt to oust the agency’s executive director and CEO, Andrew Robbins.
Then, of course, there was Mayor Kirk Caldwell’s decision to pull the city from the P3 procurement process. The full reasons cannot be discussed while the proposal is still in play, Caldwell said, due to procurement law, although he outlines in a commentary on Page E1 some of his reasoning. Based on what he saw in the deal, as well as observations of P3 arrangements elsewhere running into problems, the mayor wanted to opt out.
Even while taxpayers must wait for the P3 bid details to become public, the city has much work to do on their behalf. Clearly, some reconciliation must happen to ensure that the city and HART (a separate, semi-autonomous agency) come to terms and get on the same page going forward.
If Honolulu is to have a partial rail operating for an extended period, there must be coordination of transportation services so that commuters will have a multimodal transit system that’s as efficient as possible.
Caldwell announced on Sept. 25 that he had alerted the Federal Transit Administration about the city’s withdrawal from the P3. That contract negotiation, itself delayed because the pandemic complicated bidders’ efforts to finalize proposals, was to have formed the partnership to handle both construction of the final segment and the operation of rail.
The deal was aimed at saving the city on construction costs at the front end, with operators recouping more revenues once the system opened. However, Caldwell wrote, “it did not lower costs, shift certain important risks away from the city, or provide schedule certainty.”
All the same, the timing is politically awkward. The election of Caldwell’s successor is due in 10 days, along with significant turnover on the Honolulu City Council.
In addition, Robbins on Wednesday told the Council that he is in discussions with P3 bidders about the best way forward. That’s why the Council should agree to Robbins’ request to delay a vote on the P3 withdrawal until early November, allowing time for those talks to conclude. HART should be able to make a persuasive case to the FTA for further postponement of its financial plan, given the difficult transition and pandemic recession.
Ideally, the next mayor would weigh in on this critical course correction, but it’s unclear how much longer HART will be able to put off the final disposition of the P3. So much hangs in the balance: HART is operating under the assumption it could risk losing $250 million in federal subsidies if FTA doesn’t sign off on the financial plan by year’s end.
In short order, the Council, city administration and HART should enable public discussion about ways to salvage the best rail-building outcome from this latest setback, pressing ahead to launch partial service from East Kapolei to Aloha Stadium, along with a new fare system, and reimagining ways to link with buses. If this last leg of the project path is going to be this halting and bumpy, Honolulu might as well use the time added to the calendar to come up with creative solutions that best serve the community.
