With respect to the rail project, we have often heard, “we can’t do that — it would jeopardize our federal funding.” Phrases similar to that are said during nearly every council meeting when a rail measure is discussed. It is one of the main reasons cited for continuing to push forward with rail regardless of the total cost.

When the full-funding grant agreement was signed in December 2012, the estimated cost of the rail project was $5.12 billion. The federal portion of that started out at 30 percent, but as costs escalate, that percentage decreases. At $10 billion, the percentage is only about 16 percent.

HART rail guideway car photo op Farrington Hwy Waipahu Sugar Mill1. 30 may 2017

It’s clear the federal government is not going to be giving us more funds for rail construction. What isn’t clear, however, is how much this federal funding is costing us.

In order to receive the federal grant, the Honolulu Authority for Rapid Transportation (and the city prior to HART) is required to demonstrate certain “technical and financial capacity and capabilities.” HART therefore employs staff (estimated at 11 percent according to the draft of the “Business Plan for FY2017”) to work directly with the Federal Transit Administration. Using that estimate and budgeted labor costs, estimated staffing costs due to the federal grant were about $1.5 million for FY 2017.

Other direct costs include travel for quarterly meetings on the mainland, audits and special reporting related to compliance with the federal Buy America and Disadvantaged Business Enterprises programs and increased wages due to the Davis-Bacon Act. (Approximately 50 percent of one recent $3 million change order was due to Davis-Bacon wages.)

Part of the multimillion-dollar contract with Infraconsult, which was effective in 2007, is for direct work with the FTA. Indirect costs of the federal grant include overhead, e.g., rent, computers, and communications.

These costs add up to a significant portion of the $1.55 billion federal grant when extended out for the duration of the project. The biggest cost, however, may be not considering alternatives that may result in the best option.

Foregoing the federal grant may be the price we have to pay for aggressively pushing forward with this poorly planned project, but it may not be as large of a loss as we have been told. Let’s take some time to evaluate all of the reasonable options available to us.

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