Dive Brief:
- The Honolulu City Council last week voted 7-2 to approve a measure that would fund up to $214 million of the troubled 20-mile, $8.1 billion Honolulu Rail Transit Project. Honolulu Mayor Kirk Caldwell signed it into law on Nov. 1, the Pacific Business News reported, reversing a 2006 city decision not to provide funding for the rail.
- The new ordinance will fulfill the $44 million obligation to the project for fiscal years 2018 and 2019 as outlined in the Recovery Plan that the Honolulu Authority for Rapid Transit submitted to the Federal Transit Administration in September 2017. Spending for the rail cannot exceed $26 million annually and is capped at a total of $214 million. The FTA took the city to task in an Oct. 26 letter for not making the money available sooner and said it might "proceed with the remedies set forth in the Full Funding Grant Agreement for this project" if the city did not identify and implement a funding mechanism by November 20.
- The city will finance its commitment through various revenue streams, including real property taxes, public service company taxes and its share of the transient accommodations tax. The FTA has reportedly withheld approximately $745 million from a $1.5 billion grant waiting for the city to make the funds available. The agency projected that the rail initiative would cost $134 million more than HART estimated, but the authority said in its October revised recovery plan that it would be able to deliver the project for $8.1 billion nonetheless.
Dive Insight:
As it stands now, projected costs for the rail are $3 billion higher than original estimates, and the project is approximately nine months behind schedule. However, costs could escalate further if the authority has to make good on a $200 million damages-for-delays claim from the Ansaldo Honolulu Joint Venture, which has a $1.4 billion contract to build, install and maintain the system's driverless cars. Members of the joint venture include Ansaldo STS, a Hitachi Group company; Hitachi Rail Italy; Johnson Controls; Mass. Electric Construction Co.; Nokia; Siemens; Stanley Access Technologies; and Honolulu-based Watts Constructors.
In an effort to save money and not lose additional time, the authority plans to use a public-private partnership for the last four miles. According to a third-party bid notification service, the winning team will design and build an elevated guideway, eight stations, a 1,600-stall parking garage, a six-bay bus transit center and access ramps, along with other infrastructure improvements. The private partner would also operate and maintain the system.
