The city expects to break ground on Honolulu’s rail system in March, moving ahead with construction of the $5.5 billion transit project after receiving final environmental approval from the Federal Transit Administration.

The FTA issued a "record of decision" yesterday, which indicates the project met all the requirements of the environmental review process, which has been the largest roadblock to putting shovels in the ground.

Ending the environmental process is a significant milestone for the city, which has tried for decades to implement rail transit as a solution to backed-up freeway traffic.

The last serious effort ended in 1992 with a 5-4 City Council vote against raising taxes to pay for a transit system, even though more than $600 million in federal funding was locked in.

The record of decision states that the project, which would connect East Kapolei with Ala Moana Center, would save residents more than 20 million hours of travel time every year by 2030. The project also would be a boon for the local construction industry, which saw a 6 percent drop in jobs last year, city officials said.

"What this project essentially means is one thing: jobs," said acting mayor and city Managing Director Douglas Chin. "Once it starts, this project will create thousands of jobs. It will fuel the city and state’s economy."

The decision, signed by FTA Regional Administrator Leslie Rogers, states that "all reasonable steps are being taken to minimize the adverse environmental effects of the project, and where adverse environmental effects remain, no feasible and prudent alternative to such effects exists."

One remaining hurdle is a pending application for a Special Management Area permit, which the City Council will decide on next week. Other permits are required but need only administrative approval from the city Department of Planning and Permitting.

"With the completion of the National Environmental Policy Act process, the city of Honolulu has met all of the laws and regulations of the environmental review, and we look forward to the day when Honolulu’s citizens can ride the rails in comfort, breathe cleaner air, and avoid getting stuck in time-wasting traffic jams," said FTA Administrator Peter Rogoff in a release.

Chin said yesterday that the city still expects to break ground in March. He said, "There’s no reason to think otherwise. That is something we’re shooting for."

The FTA still has to issue a "letter of no prejudice," which would allow city funds to be used on the project.

The city also must enter into a full-funding grant agreement with the FTA by committing to complete the project on time, within budget and in compliance with federal requirements.

The city expects to have a full-funding grant agreement with the FTA by late this year or early 2012.

Rail critics, such as former mayoral candidate Panos Prevedouros, have expressed concern about whether the city will obtain federal funding, now that the U.S. House is controlled by Republicans.

"I think the stars are out of alignment," said Prevedouros, a University of Hawaii engineering professor.

The city is seeking about $1.5 billion in federal funding, which Prevedouros calls a "very bad deal."

"Every road we build, we build with 80 to 90 percent federal funding," he said. "Fifty-fifty is not even a particularly good deal. You can be pro-rail or anti-rail, but 25-75 is not a good deal."

Tomorrow, Mayor Peter Carlisle, who is in Washington, D.C., will meet with Republican U.S. Rep. John Mica, chairman of the House Transportation and Infrastructure Committee.

"The indication that we’ve had is that Rep. Mica and other members of the Transportation Committee are positive about the rail project, and we’re hopefully going to be confirming that this week," Chin said.

"Of course, it is subject to Congress appropriating the money every year in terms of their budget," said interim city Transportation Director Wayne Yoshioka. "But in the past I don’t think there’s a single incident in history, that once you get a full-funding grant agreement, they have not fulfilled their contract."

The gears in the environmental process stopped last year when the final environmental impact statement sat with former Gov. Linda Lingle while she commissioned a financial analysis.

The process moved again once Gov. Neil Abercrombie took office last month. He signed the EIS despite the Lingle financial report’s conclusion that the city would face a $1.7 billion shortfall in project funding. Abercrombie said the financial report had no bearing on the environmental process.

The project also needed a programmatic agreement to be signed by several parties, including the state. The agreement would outline how to conduct archaeological surveys.

However, the agreement drew criticism last year from the Oahu Island Burial Council, whose members argued that a full survey of the route should be conducted before any agreement is signed. The city proposes a phased approach to conducting surveys.

Last week, William Aila, interim director of the Department of Land and Natural Resources and state historic preservation officer, signed the agreement, paving the way for the FTA to issue its record of decision.

The phased approach will allow the city to determine exactly where burials might be located, Yoshioka said. A full survey would still rely on estimates on where the rail transit would make an impact.

If the project was at grade, on ground level, the city would have to consider relocating the route, Yoshioka said.

"But because we’re elevated and our contact on the ground is through concrete piers, we can alter the spacing and alter the location or configuration (of the piers) to avoid the burials," Yoshioka said.

Any changes to what the final EIS outlines must be approved by the FTA, Rogers said.

The city is also pending approval of a Real Estate Acquisition Management Plan. It would authorize the city to begin acquiring any real property necessary for the route and begin the relocation of affected people, businesses and utilities.

Yesterday the City Council’s Transportation Committee also held a hearing on the city’s application for the Special Management Area permit, which is required because of the project’s proximity to coastal resources.

Of the project’s 20 miles, 1.6 miles are located within special management areas. They are:

» Waipahu area between Pupupuhi and Waipahu Depot streets.

» Near Leeward Community College.

» Kamehameha Highway near Kaonohi Street.

» Keehi Lagoon Beach Park.

The permit was voted out of committee and will be decided on by the full Council next week. Councilman Breene Harimoto, who chairs the committee, said remaining concerns, such as rail finances or technology, will still be addressed as the project moves along.

"It doesn’t mean we don’t need to address the concerns and issues," said Harimoto. "We do. But yet it’s important that we’re still moving forward. If we’re ever going to get that federal funding, it’s very important to show that we’re committed and moving forward."