Uneasy about giving the OK to extend the 0.5 percent surcharge on general excise tax on Oahu consumers for five years to build the contentious rail project, City Council members continue to press transit officials for alternatives.

But Dan Grabauskas, executive director of the Honolulu Authority for Rapid Transit, continues to insist that straying from the current plan for the now $6.57 billion project could jeopardize $1.55 billion in project funding.

Extending the surcharge through 2027 is projected to bring in $1.6 billion. Council members, however, want to know what would happen were they to decide to cap the amount going toward rail at $910 million, or to not pass the extension at all.

At a Council Budget Committee hearing last week, Chairman Ernie Martin said that so far members haven’t seen those contingency plans. Martin and members of the committee continued to ponder the “what-if” scenarios surrounding rail financing at another public meeting Monday at Washington Middle School — particularly during an exchange with Mayor Kirk Caldwell.

Martin asked Caldwell what would happen if the Council were to extend the full five-year extension but costs continued to increase to the point where even that amount would not suffice.

Caldwell said that he didn’t want to speculate, but he added that rail officials have informed him the five-year extension would cover the 12 to 13 percent annual construction cost increases that Oahu is enduring.

“If it exceeds that amount, then something needs to be done to address it,” Caldwell said Monday, adding that the city would have to look at some form of cost-cutting that doesn’t involve trimming the current 20-mile route.

“As you shorten the system, riders drop off” because they won’t use the line if it requires too lengthy of an additional bus ride, he said.

The Council is vetting Bill 23, which proposes to extend the surcharge.

Grabauskas told the Council at a meeting Thursday that if it does not pass the five-year extension, the Federal Transit Administration could terminate the agreement and ask for its money back.

“If the five years is not approved, obviously we’d go back to the HART board of directors and the FTA … and we would have to first of all have to inform the FTA that we’re in breach of the FFGA (Full Funding Grant Agreement) and see what they’re going to do, and then, as a community make a decision about what we’re to do,” Grabauskas said.

“That’s not really a contingency plan; that’s basically throwing in the towel,” Martin shot back.

Grabauskas said that what HART is “asking for is the money that we’ll need to complete the project on your behalf,” adding, “We are the agent for the city and county, at HART, to construct the project. If you as decision makers choose to give us different directions, we will follow that.”

But Martin insisted there have to be other options.

“It’s hard for me to believe that the FTA would force the City and County of Honolulu to go into bankruptcy just to comply fully with the Full Funding Grant Agreement,” he said.

Budget Chairwoman Ann Kobayashi asked Grabauskas whether the project would stop should the Council not approve the surcharge.

“Based on the amount of money we have right now, our best estimates are that we would fall short to be able to have money available to complete the project,” Grabauskas said.

“I couldn’t even sign a contract with a construction company unless I have more than sufficient funds identified,” he said. “And so if the bill were not to pass, then I certainly can tell you we would not have enough funds to complete the project.”

Kobayashi then suggested that HART end the rail line at Middle Street in Kalihi, rather than at Ala Moana Center. “Then at least that is a project that we could afford,” she said.

“Usually, when there’s a project and there’s not enough money, you have to redesign and make it fit,” she said. “So rather than … having the taxpayers have their property taxes increase, all kinds of fees increase just to cover the cost of this project because you’re not willing to go to FTA to say, ‘We’re in big trouble here.’”

Grabauskas reiterated that changing the route, length and technology of the project all could constitute a breach of the contract.

If that’s the case, “we have to start negotiating, we have to start finding out and having a Plan B or a Plan C,” Kobayashi said. “But in order to make it work, you have to be willing to cut back, and I would think that FTA would understand that ‘Hey, that project is in big trouble.’”

Grabauskas responded, “What they have told us in writing is that the City and County of Honolulu and the federal government entered into a contract to build 20 miles, 21 stations. If the City and County of Honolulu … chooses not to fulfill that obligation, then they would exercise their right to pull out of the deal and take their money with them.”

Kobayashi said, “So we’re just going to jeopardize the welfare of all of our taxpayers just to make this project pan out. It just doesn’t seem right. I mean, we’ll have this project but everybody will be homeless.”

Even a longtime project proponent, Councilman Ron Menor, said he won’t support rail if the price tag continues to rise dramatically.

”There comes a point at which, with the costs really escalating, the Council should have the option and the ability to be able to reconsider the length of the route,” Menor said. “If the cost estimates you come up with prove to be inaccurate and we find out three or four years later instead of $6 billion it’s going to cost $10-15 billion, that would definitely be cause for the Council to revisit the configuration and the length of the rail line.”