Honolulu has awarded more than $1.6 billion in contracts to build the city’s $5.5 billion rail system, without any guarantee it will receive the federal funds it needs to pay for the work.
Federal Transit Administrator Peter Rogoff says that’s par for the course, even though the city hasn’t yet entered the Full Funding Grant Agreement (FFGA) stage with the FTA.
An FFGA guarantees the federal portion of funding for a rail project. When Honolulu completes its FFGA, it’s expected to get about $1.55 billion in federal funds. The rest of the cost will be covered by a .5 percent GET surcharge.
“It’s not unusual,” Rogoff said at a March 22 rail conference at the Hilton Hawaiian Village, referring to contracts being awarded before the FFGA stage. “Understand that more than a billion dollars is a very large number, but it’s a $5 billion project, so you’re talking about 20 percent. Importantly, for the FTA to see how costs are really coming in, we review those contracts. The greater specificity and certainty we have to the actual project cost, it gives us greater comfort to know that the project’s sponsor can afford the project. So I wouldn’t view it as out of the ordinary at all.”
Is it unusual to award 20 percent in rail contracts before federal support is assured?
It isn’t, according to the FTA. (OK, maybe no surprise there, given that Rogoff is the boss. But we also found our own example of another city that’s done the same as Honolulu.)
The agency doesn’t keep records that would specifically address the question. However the FTA offered four examples of projects where large portions of the contracts were awarded before the FFGA.
The table below represents information provided by the FTA:
Northern Virginia Dulles Corridor Metrorail Project Extension to Wiehle Ave
Denver West Corridor Light Rail Transit Project
Seattle, University Link LRT Extension
Salt Lake City, Mid Jordan LRT
Civil Beat found one other case where a large percentage of rail contracts were awarded before the FFGA.
In St. Paul-Minneapolis, for example, the Central Corridor Light Rail line is estimated to cost about $957 million.
In June 2010 — before the FFGA — the St. Paul Metropolitan Council awarded a $205 million contract to Chicago-based Walsh Construction for the eastern portion of the line, according to the Daily Reporter.
The contract covers slightly more than 20 percent of the total cost of the St. Paul light rail.
Taking this example along with the four projects cited by the FTA, Honolulu is not acting in an unusual way in awarding large contracts before the FFGA.
Stay Up To Date On The Coronavirus And Other Hawaii Issues