Honolulu won’t receive $1.55 billion in federal funding for rail unless it strengthens its financial plan. So what steps is the city taking to make sure everything is in order?

“We have a lot of work to do,” Honolulu Authority for Rapid Transportation board Chair Carrie Okinaga told Civil Beat Thursday morning after HART’s Project Oversight Committee discussed the Federal Transit Administration’s demands.

“We are on top of it. We have to stay on top of it to meet these deadlines,” Okinaga said. “So that’s the key, is keep everything moving.”

In written responses provided by a spokeswoman, HART interim executive director and CEO Toru Hamayasu said the language of the FTA is “typical in the federal process” and that everything is on track. He was not at the HART committee meetings Thursday as he was on his way home from Washington DC after a “productive” meeting with FTA Administrator Peter Rogoff.

“The approval to enter into Final Design shows that the FTA has confidence in the project, or they would not have allowed us to proceed this far,” Hamayasu said. “It is definitely good news and a major accomplishment.”

Hamayasu and Okinaga both said the FTA approved the September 2011 draft of the financial plan, which includes a number of alternative funding mechanisms. Options explored in that document include:

  • “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.

But the FTA threw cold water on some of those ideas. The Dec. 29 letter says:

Specifically, the financial plan states that additional revenues may be obtained from an extension of the General Excise Tax or implementation of value capture mechanisms. However, these revenue sources require actions by the State of Hawaii and/or the City that have not been taken and which are beyond HART’s ability to control. Prior to the Project’s consideration for an FFGA, HART should demonstrate the availability of additional revenue sources that could be tapped should unexpected events such as cost increases or funding shortfalls occur.

Civil Beat asked if the FTA has communicated to HART the size of the redundancy necessary to secure the project’s finances; if there are other criteria the FTA will weigh to determine if HART’s financial plan is strong enough to warrant federal funding; and if the FTA has suggested alternate funding mechanisms that don’t require actions from the state or city governments.

The FTA declined to expand upon its letter. Civil Beat has filed a Freedom of Information Act request for reports and other internal FTA documents related to Honolulu’s financial planning.

Hamayasu also was mum about the content of his meeting with Rogoff and about the steps HART will take to ensure it secures federal funding this fall.

“I assured Administrator Rogoff that we will continue to work together in the coming months to meet all of the requirements – including strengthening our financial plan — so that we are able to enter into the Full-Funding Grant Agreement on time,” he said. “We will continue to explore options and suggestions and to work with the FTA with our existing staff.”

HART spokeswoman Jeanne Mariani-Belding did rule out one step, at least for now.

“There are no plans to ask for an extension of the GET at this time,” she told Civil Beat. Such an extension would require an act by the Hawaii Legislature.

Okinaga said value capture programs and other potential revenue streams would likely require legislative action by the Honolulu City Council, and that she as board chair is prepared to go to the Council to advocate for measures that would help HART convince the FTA it’s capable of funding the project.

“At this time, it’s kind of premature. I just want to get the report about what FTA was specifically saying,” she said. “But obviously anything that the board can do to assist the agency in getting the money that we need to do the project, we’ll be trying to assess within the parameters of our respective roles.”

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