LOS ANGELES — Honolulu's passage of a general excise tax extension for its $6.9 billion elevated rail project will free up $250 million in federal money and is a credit positive, Moody's Investors Service said.
Project costs have soared to close to $2 billion more than original estimates on the project slated for completion in 2019.
The City and County of Honolulu voted to extend the 0.5% GET surcharge by five years to help cover cost overruns associated with construction of the 20-mile rail line across Oahu.
The surcharge extension is expected to provide from $1.2 to $1.8 billion in additional revenue for the project, according to Moody's.
The Federal Transit Administration had held up its most recent $250 million allocation for the project, because cost overruns raised questions with the federal agency as to whether the city would be able to complete the project, according to Moody's credit commentary released Monday.
FTA has already given the city $800 million of the $1.55 billion in agreed upon matching federal funds.
The rail line experienced shortfalls as GET collections came in 3% below projections while construction costs increased and the project experienced delays from litigation on environmental issues that have since been resolved.
The cost of the project has risen from an anticipated $5.2 billion to $6.9 billion since 2010.
Hawaii Gov. David Ige requested prior to passage of the surcharge that the Honolulu Authority for Rapid Transportation provide detailed quarterly reports to state lawmakers.