After more than six hours in a tense Transportation Committee meeting last Wednesday, Honolulu Managing Director Doug Chin — like just about every other person in the City Council’s committee room that night — appeared tired.
Chin sat through the entire meeting, and was repeatedly called upon to testify on behalf of Mayor Peter Carlisle. Several key Cabinet members were there, too. The administration’s strong showing before the City Council was designed in part to quell growing complaints that Carlisle and company are not being forthright or transparent enough about the city’s $5.5 billion rail project.
The council’s Transportation Committee chairman, Breene Harimoto, told Civil Beat last month that his loss of confidence in the administration was serious enough to jeopardize his strong support of the rail project. That level of concern is what led Harimoto to encourage his colleagues to interrogate the administration on rail. While hours of questioning covered a lot of ground, council members largely focused on the two new rail contracts Carlisle announced on March 21.
So when asked after the meeting to acknowledge that a press release the city issued about a $574 million core systems contract could be seen as misleading — Civil Beat found the contract would actually cost the city more than $1 billion — the managing director sighed.
“If you want me to cop to that, let me read it really closely,” he said. “Then I can give you a more measured response.”
The press release issued by the mayor’s office says the core-systems contract “consists of the train vehicles and system control center.” Actually, the contract — known as a Design Build Operate Maintain contract — also entails an interim period of operations and maintenance before the rail line is completed, as well as the first five years of operations and maintenance of the completed system.
The winning bidder, Ansaldo Honolulu, would get an additional $506 million for operations and maintenance in the proposal city officials selected, bringing the total value of the contract to more than $1 billion. But the city’s press release only mentions the $574 million cost of the core systems contract, despite a passing reference to operations and maintenance.
“Ansaldo was selected as the winning bidder for the $574-million core systems contract and will be responsible for manufacturing an initial order of 80 train cars for the Honolulu rail system, as well as providing power and communications for the system,” the press release says. “The core systems contract came in about 27 percent under the current project estimate. Ansaldo will also operate and maintain the rail system.”
A large poster board presented at the press conference also emphasized the $574 million figure:
In an email response after the Wednesday Transportation Committee meeting, Chin said the city focused on the first phase of the potential contract with Ansaldo Honolulu because it was the only portion of that contract with a cost covered by the oft-cited $5.5 billion price tag. Incorporating additional costs into discussion of rail would be like “comparing apples to oranges,” he said. Chin called any criticisms about transparency that emerged as a result “regrettable.”
Here’s his complete reply:
“The City’s March 21 press release, “Rail Project Contracts Under Budget by $165 Million,” compared the cost of the announced construction contracts to the total of the highly publicized estimated construction budget of $5.5 billion – i.e., apples to apples. The $5.5 billion will be funded through the O‘ahu GET surcharge and federal monies and represents the rail experts’ best estimate of the cost of all increments of the construction of the rail project. The construction contracts announced on March 21st are under the construction budget by $165 million. Together with two other previously awarded construction contracts, the total to date is $300 million under budget.
Non-construction costs such as operation and maintenance were also included in the City’s bid specifications for the train cars, but these costs are not included in the estimated construction budget of $5.5 billion. To include these costs – as some have erroneously done – would have been comparing apples to oranges. At the press conference on this subject, it was the City that brought up the additional operation and maintenance costs with the press, not the other way around. The City directed the press to where those costs could be located in public documents or furnished those numbers upon request.
It is regrettable that some – including the losing bidders – chose to use this as an illustration that the Mayor is not being forthright with the public. Transparency is a priority for this administration and Mayor Carlisle has gone above and beyond what has been done before by implementing Can-Do Honolulu, a website dedicated to providing information to the public.
U.S. Secretary of Transportation Ray LaHood said during his visit to Honolulu last month, ‘Everything that’s been done here has been done correctly and done with our full authority. Everything has been done by the book.’ We will work with the new Transit Authority and the City Council to make sure the project remains this way.”
The website Chin mentioned is mostly static thus far. Carlisle launched it last month to demonstrate a commitment to transparency, but it has barely been updated since it went live March 8. There are 40 documents on the site, including Cabinet members’ financial disclosures, the mayor’s proposed spending plan for next year and the budget for a new transit agency.
Chin correctly stated that the administration pointed out the additional operations and maintenance costs entailed in the core-systems contract during a press conference March 21. But rail officials declined to discuss the matter in any detail.
Here’s a transcript from Civil Beat’s recording of the press conference.
TV Reporter: Can you elaborate on what the core systems means?
Peter Carlisle: The core systems is essentially those things that actually operate trains. You have the trains themselves but you also have the operations of the train and the transit management center… and they maintain the trains as well.
Chief Rail Planner Toru Hamayasu: This is to operate and maintain the first five years, with an option for five additional years. That price is not included in this. This is for first installation and then vehicles.
Radio Reporter: And the vehicles?
Peter Carlisle: And the vehicles, which I believe are 80 vehicles?
Toru Hamayasu: About 80, yes.
Radio reporter: Trains, in other words.
Carlisle: (Train) cars.
Civil Beat: So then, what’s the cost of the first five years of operation and maintenance not included?
Toru Hamayasu: For?
Civil Beat: You said —
Peter Carlisle: What’s the cost of the first five years?
Civil Beat: You said that it includes the first five years of operations and maintenance, but that’s not included in this figure?
Toru Hamayasu: No, it’s not included in this figure because that’s something that we have to still work out. But there is a close amount that you can see shortly.
Civil Beat: Can you tell me what it is?
Toru Hamayasu: I can’t. I don’t remember the number.
Later, Civil Beat stopped by the city’s Purchasing Division to inspect a copy of the Ansaldo Honolulu bid. But the pages detailing the cost of operations and maintenance are heavily redacted. When asked about the cost via email, Hamayasu was quick to respond.
“In the same place you looked, you should be able to find $339,056,303 as the cost of the first 5 years full operation,” Hamayasu wrote on March 24. “167 you found is the intermediate years before the full system, and 317 1 is for the second 5 year full operation. The intermediate operation is in the year of expenditure dollars and other two are in current dollars because inflation is calculated with a formula included in the RFP. This was done so we can compare the costs fairly.”
In a later conversation, Civil Beat pressed for a more complete explanation of why officials presented those three costs as distinct, when the city would have to pay more than $574 million as part of the single core-systems contract.
“I know what you’re trying to do and I’ll be honest, it’s really hard to say, ‘Over so many years, we’re going to be spending over a billion dollars’ or whatever,” Hamayasu said. “What is the cost of the contract? Yeah, it’s going to be more than $573 (million). You cannot start adding those components because the third component is uninflated 2011 dollars.”
Over the years, Hamayasu has found himself answering the same questions over and over. A reporter will ask the same question as a City Council member, which is asked yet again by an Oahu resident. Sometimes Hamayasu laughs while he responds, like the repetition is so absurd that it’s funny. Other times, he loses patience, and raises his voice. At last Wednesday’s City Council meeting, he did both.
“Whenever they ask questions, we always respond,” Hamayasu told Civil Beat when asked on March 23 about City Council members’ transparency concerns.
“I’m sure Toru, in his mind, thinks that he’s being forthright in what he represents to the council,” said City Council Budget Chairman Ernie Martin. “Toru’s level of understanding of the project is so far advanced that in, his mind, he thinks he’s providing sufficient details. I think from the council’s perspective, we’re expecting more. Often times, when I listen to Toru, I think he could be a little bit more detailed.”
Hamayasu isn’t the only member of the executive branch facing criticism from the City Council. Transportation Chairman Harimoto was clearly angry to have his transparency concerns snubbed by the mayor, after Carlisle told Civil Beat he doesn’t remember whether the two discussed transparency in a March 24 meeting.
At the March 30 Transportation Committee meeting, an exchange about the meeting between Harimoto and Chin ultimately led Harimoto to call a recess and request a brief private meeting with the managing director.
Chin: You can never accuse the mayor of not being direct, or not telling you exactly what he thinks about —
Harimoto: Well, he certainly told me exactly what he thought last Thursday, and it wasn’t that he wanted to work with us.
Chin: Well, I understand that.
Harimoto: You can tell I’m not pleased.
Chin: That’s why I’m here.
Harimoto: Then I read in the Civil Beat that he doesn’t recall that meeting.
Chin: That’s why I’m here. That’s why there are two of us; a mayor and a managing director.
Harimoto wasn’t the only council member to express frustration with Chin that night. For example, Chin said there would soon be an arrangement on oversight of HART that he believed would represent a compromise between the administration and the City Council, but declined to explain what that agreement would be.
“Last time I checked, I had a vote on this council too,” City Council member Ikaika Anderson told Chin. “And the council member sitting next to me. We all get a vote, sir. If there’s an official arrangement to be made, I would say that all of us, collectively, should at least be aware of what’s going on.”
Chin still declined to provide details, saying it wasn’t the right time to do so. Martin later told Civil Beat he believes the tension between the two branches makes it difficult to have productive conversations.
“The demeanor that the executive branch comes forth with is adversarial right from the start, rather than a cooperative type demeanor that I think would be more helpful,” Martin said. “Once you come with an adversarial demeanor, then it stymies the discussion. I think if they could be less adversarial, the council members would get the information they requested.”
City Council Chairman Nestor Garcia has acknowledged that relations between the City Council and the mayor are not ideal. He said he hears “a lot” of concerns about transparency, with little acknowledgement from Carlisle. This sort of political jousting is healthy, he says, but only if the mayor is willing to publicly partake in it.
“If we didn’t have this kind of tension, people would begin to wonder if each of the branches is doing its job,” Garcia said. “There is always going to be an adversarial relationship, and that’s good for government. But the mayor has to understand the role that we play. Everybody has a role to play, and we want to play our role. If he can figure out a way to come to that understanding, everything else will work out.”