FTA Grants Honolulu Rail Extra Time to Cover Shortfall

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LOS ANGELES — The Federal Transit Administration granted Honolulu's troubled rail transit project a four-month extension to submit a plan to close a shortfall of up to $2.3 billion.

The Honolulu Authority for Rapid Transportation sent the FTA an interim recovery plan in October and requested until July 30 to develop a full-blown alternative. The FTA gave HART until April 30 to submit a plan. The original deadline was by year-end.

"We appreciate the many challenges that HART has faced in design and construction of the project and the progress that HART has made since our August meeting," said Leslie Rogers, FTA's regional administrator, in a Dec. 6 letter to Honolulu Mayor Kirk Caldwell.

Rogers included hiring Krishniah Murthy as interim director and arranging for a peer review of the project by industry experts as indications of progress made.

HART submitted an interim plan in October that included two proposals. The first was to raise money through the city and state legislative process in 2017 to complete the project as originally conceived or defer some stations and other elements of the project, so the project costs come in at the $6.8 billion anticipated from revenue sources.

HART has to be careful not to pare the plan back so much that the federal government would withdraw the $1.55 billion it is contributing to the project. In December 2012, the FTA agreed to contribute $1.55 billion for Honolulu to build a 20-mile elevated rail system with 21 stations from East Kapolei to Ala Moana Center.

When city and HART officials met with the FTA in August, HART proposed an alternative plan that would shrink the line five miles by stopping at Middle Street in downtown Honolulu, rather than Ala Moana Center and requested additional federal funding. The federal agency said "no" to more federal funding and to the shortened route.

Rogers appeared more amenable to the city shortening the route to a downtown stop, but encouraged HART officials to come up with a plan that includes full analytics on such a proposal.

HART released estimates a week ago that put construction costs at about $8.2 billion, but those estimates don't take into account finance costs. Depending on financing costs, the project has a current shortfall of between $1.4 billion and $2.3 billion. Finance charges, including bond issuance and interest charges, are dependent on extension of the GET surcharge, according to the report.

City and HART officials hope to persuade the Legislature to extend a Honolulu surcharge of the state general excise tax to complete the project. The legislature already approved a five-year extension of the GET earlier this year.

In the FTA letter, regional administrator Leslie Rogers acknowledges the city's desire to find enough money to build the project as first envisioned, but urges officials to continue to work on the "Plan B" for a scaled-back system that would end at a downtown station. The alternative plan needs to include a detailed cost and schedule analysis, ridership studies, and cost savings.

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Transportation industry Hawaii
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