The man in charge of Honolulu’s rail authority says he doesn’t need to show the Federal Transit Administration any new powers to raise funds in an emergency — because the city government already has those powers.
That’s the most direct answer yet to a question floating around for nearly a month, since the FTA told HART that the rail financial plan needs to be strengthened before Honolulu can get $1.55 billion in federal grant funds. That question was how could HART raise more money when it doesn’t have that authority.
Hamayasu’s answer that raising money is the city’s job also clarifies how HART views its independence, something that is still being defined a little more than six months after it came into existence as a semi-autonomous agency responsible for rail transit.
The FTA’s Dec. 29 letter instructed HART to “demonstrate the availability of additional revenue sources that could be tapped should unexpected events such as cost increases or funding shortfalls occur.” Without help, HART can’t tap the two emergency funding sources it identifies in its most recent financial plan.
Mayor Peter Carlisle and HART were quick to dismiss the idea of extending the GET surcharge at this point, but were mum on how else to alleviate the FTA’s concerns about funding.
Until now, the expectation had been that HART would have to come up with answers. And it will still update its plans. But Hamayasu said Thursday that it’s the city, not HART, that’s ultimately responsible for making sure the money is there to complete the project. Because the city has the power to raise property taxes, that may be an adequate answer to the FTA’s question about capacity to generate revenue for extraordinary expenses.
But it’s also an answer to the question of how independent HART is.
The FTA’s letter asked HART to clarify who exactly is responsible for making sure the project gets done. HART replaced the city as the “project sponsor” when it was established July 1, 2011, the letter notes.
“‘It has not yet been decided if the grantee responsibilities will transition from the City to HART,'” Hamayasu said, reading the letter aloud. “So I told them, it’s been decided. We never asked to change the recipient.”
Here’s a brief exchange that illuminates Hamayasu’s position:
Civil Beat: “You’re saying, ‘We’re the city. HART and the city are one. We, as the city, already have the authority. Don’t worry about it.'”
Hamayasu: “Pretty much.”
Told about Hamayasu’s statements, Council Budget Chair Ann Kobayashi said she had read the FTA’s letter differently and was surprised that HART thinks it can rely on the city for support.
“That throws a new wrinkle in it, because I didn’t think they were relying on the face of the city,” she told Civil Beat. “That sounds like what a child would say when they’re trying to get independent, but they’ll say, ‘Yeah but my parents are there, they’ll back me up on any loan.'”
Kobayashi said she’s repeatedly reminded rail planners that they’re supposed to fund construction entirely through the general excise tax surcharge and federal funds, and that they shouldn’t expect help from property tax revenues.
“I just assumed that they, meaning HART, is going to find that pot of money, because the face of the city doesn’t mean any kind of guarantee of money, because our only source where we can get a huge amount is either floating bonds or raising property tax,” she said. “Until I see their source, I’m not going to look for that source. It’s HART’s responsibility.”
Council Chair Ernie Martin was less perturbed by HART’s stance because, he said, the City Council is the final authority when it comes to all financial matters with respect to HART.
“(A)ny additional revenue that is being proposed by HART is subject to the review and approval of the City Council,” Martin said in a written response to Civil Beat’s questions. “Accordingly, the City Council will be exercising all due diligence in its review of any revenue sources proposed by HART for this project.”
Carlisle’s office did not respond to similar questions about HART’s assertion that the city is the recipient of federal funding and is the ultimate backstop for concerns about revenue.
Hamayasu downplayed the importance of emergency financial planning.
“Regardless of how it’s put by the feds, what they’re asking for is not really more money. What they’re asking is our ability or authority to raise more money in case something happens,” he said, noting that the federal government has used Hurricane Katrina as an example of unforeseen events that must be planned for. “It’s that kind of extraordinary event is what they were concerned about.”
But just because Hamayasu says emergency revenues are unlikely to be needed and that the city government is ultimately responsible for project financing doesn’t mean HART believes its work convincing the FTA to fund the project is done.
“Primarily we have to update, or maybe it’s not even update, some of them are still the same,” he said.
The FTA letter told HART to either justify or revise its assumptions about TheBus and TheHandi-Van operating expenses; the share of the city’s annual budget for transit; and the diversion of preventive maintenance money to rail construction. Hamayasu said there might be some minor “clarifications,” but that he believes no “major changes” are needed to the financial plan approved by the FTA last month.
“That’s what we’re going to talk about with FTA. What level do they want? Now that we’ve established that the city is the grantee, what is it that they want?” Hamayasu said. “That’s what we’re going to negotiate.”
He told the board that HART and the FTA are getting together for weekly teleconferences and have come up with a draft schedule that calls for HART to submit its final package to the FTA by May 1. After some time for review, the FTA will turn it over to the Obama administration for a final look, and then it will go before Congress for at least 60 days.
Hamayasu hopes to have a federal commitment to the $1.55 billion Full Funding Grant Agreement in hand by October of this year.
Read the following stories for what local and federal officials have said about rail funding in recent weeks: