The City and County of Honolulu signed an agreement with the Federal Transit Administration Wednesday that secures $1.55 billion in federal funding for Honolulu's $5.2 billion elevated rail project.

The signing of the grant agreement is the final step of the FTA's New Starts federal funding process for new rail systems, and makes available $200 million to the Honolulu rail project for fiscal year 2012.

"The Honolulu rail transit project, the first of its kind in the state, will bring new transit options to the growing region and create a modern transportation system that is built to last for future generations," said U.S. Transportation Secretary Ray LaHood in a statement. "And though, sadly, U.S. Senator [Daniel] Inouye cannot be here with us today, this agreement is a testament to his tireless advocacy on behalf of his state and its people."

Irene Inouye, the wife of U.S. Senator Daniel Inouye, and Inouye's chief of staff Jennifer Goto Sabas attended the signing ceremony in place of the 88-year-old senator who died this week after being hospitalized for respiratory problems. LaHood, FTA Administrator Peter Rogoff, Honolulu Mayor Peter Carlisle and Honolulu Authority for Rapid Transportation Executive Director and CEO Dan Grabauskas were also in attendance during the signing ceremony in Washington.

Inouye, who championed the rail project, said recently that Hawaii leaders had been debating the merits of a rail line the majority of his time in Congress. The former chair of the Senate Appropriations Committee was elected to the House of Representatives in 1959.

Construction began on the project in March, but came to a halt in August after the state's Supreme Court ruled against the project's archaeological survey plan designed to protect ancient burial sites.

The court ruled that the survey work had to be completed before work could resume on the project that would run 20 miles from Kapolei on Oahu's west side to downtown Honolulu. The archaeological survey was expected to be completed earlier this month with the entire project expected to be finished in 2019.

The project's largest revenue source will be the $3.6 billion gained through a half-cent general excise tax, or GET, surcharge that took effect in January 2007 and ends December 2022. As of November, the agency had collected $906 million from the GET, officials said. More than $500 million has been spent on planning, engineering, design work, construction and property acquisition. Funding from the federal New Starts program administered by the FTA is expected to cover 30.3% of costs.

The HART financial plan assumes Honolulu will issue $1.7 billion of general obligation bonds backed by project revenues, beginning in fiscal 2014 that would be repaid by fiscal 2023. Other borrowing would be done on a short-term basis in the form of tax-exempt commercial paper.

In a joint statement, U.S. Senator Daniel Akaka, Senator-Elect Mazie Hirono, and U.S. Representative Colleen Hanabusa, who were also in attendance, said, "This project honors Senator Inouye's incredible legacy to our state."

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