The clock is ticking for the Honolulu rail project to stake its claim to federal funding.

But even if the money from the nation’s capital falls short or falls through, Mayor Peter Carlisle says the city is going to “plow forward” with the project.

Carlisle’s statement on Hawaii Public Radio five weeks ago was perhaps the first time a local official indicated the system will be built with or without help from the federal government.

The general understanding until now has been that the city cannot proceed unless it receives $1.55 billion in New Starts funding from the Federal Transit Administration (FTA), and to fail in that aim would be a deal-breaker. That figure represents about 30 percent of the $5.2 billion price tag to construct the system.

Asked by HPR host Beth-Ann Kozlovich what the city will do “if Congress decides for whatever reason to only give you a smaller portion of what you thought we might get,” Carlisle didn’t miss a beat.

“Plow forward. And I think that’s a hypothetical that so far is not particularly realistic,” he said.

(Listen to the interview here and skip to the nine-minute mark for that short exchange.)

Carlisle spokeswoman Louise Kim McCoy said last week that the mayor “stands by his comment.”

“Recent events, including Sen. (Daniel) Inouye‘s announcement on Tuesday regarding federal funding, confirms the mayor’s position that the rail project will move forward,” she told Civil Beat.

Indeed, the announcement last week that there will be $510 million available for new transit projects next year was seen as good news, even if Inouye himself is less than certain local officials will be able to capitalize on the money. Rail Chief Toru Hamayasu told the Honolulu Authority for Rapid Transportation board Thursday that “our expectation is receive about $125 million out of $510 million.”

Carlisle might well be correct that it’s not particularly realistic for the city to get some smaller portion of the $1.55 billion figure. New Starts funding is pretty much an all-or-nothing thing.

Officials have repeatedly made clear that the FTA has never failed to make good on a promise for funding after a Full Funding Grant Agreement (FFGA) is in place. That means if the city clears that hurdle in the fall of 2012, the full funding is pretty much guaranteed. And if it fails to hit its Dec. 31, 2012, deadline, then it might well get nothing, other than the $120 million or so it’s already banked.

But while the total funding would be secure after an FFGA, the timing of that funding wouldn’t be certain. And delays would cost the city money. Rail plans actually contemplate what would have to happen under such a delay. The September 2011 draft financial plan says:

The FFGA will also identify the amount to be made available each year, subject to annual appropriations legislation. History has shown that Congress ultimately honors and appropriates the full amount spelled out in an FFGA. Congress could delay funding for the Project by reducing or stretching out the annual appropriations. Any delay could necessitate additional borrowing or schedule delays, potentially increasing the Project’s capital cost.

There are lots of ways to plug such a funding shortfall, and any or all of them could be employed in the event that Honolulu’s request for federal funding is denied, in part or in full.

Options contemplated in the financial planning document include things like:

  • “Value capture” mechanisms like special property taxes or development impact fees in the areas around the rail line, which could generate $65 million to $95 million in revenue.
  • Private partnerships where a developer pays the city directly for costs that generate economic activity, which could bring in up to $500 million.
  • Extending the half-cent General Excise Tax surcharge from Dec. 31, 2022, when it sunsets under current state law, to Dec. 31, 2024. The extra two-year collection period would generate approximately $740 million.

Put together, those options could bring more than $1.3 billion to the city. That’s nearly enough to make up for even a $1.55 billion shortfall, and could allow the city to “plow forward” with rail — even without help from Sen. Inouye and the federal government.

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