It’s hard to put a positive spin on a $700 million shortfall, but Honolulu Mayor Kirk Caldwell and top officials from the Honolulu Authority for Rapid Transportation sure tried when publicly announcing the bad news that now hangs over the city’s $5.2 billion rail project.
On Dec. 18, HART Executive Director and CEO Dan Grabauskas told his board of directors that the project was expected to come in well over budget based on negative projections for tax revenue, higher-than-expected construction bids and a series of delay claims caused by lawsuits and poor decisions.
But what stuck out most about Grabauskas’ presentation — aside from the alarming dollar figures — was the way in which he and the board members attempted to downplay the severity of the news while at the same time congratulating one another for being so transparent about the situation.
In fact, transparency and openness were the operative words of the day as Grabauskas and nearly every member of the board made a point to talk about it. The words “transparent” or “transparency” were said at least nine different times by six different people during the hourlong presentation, including Grabauskas, who mentioned it in the first five minutes.
“The goal of this presentation really is transparency,” Grabauskas said, just before launching into the grim projections that also included a pitch to extend the .05 percent rail surcharge on the general excise tax.
“The pledge that I’ve made is that if I started to see something on the horizon I would point out to all of you what may be indicators of some concern and I’m registering that today,” Grabauskas told the board. “But I’m also saying that I’m optimistic that working in partnership with others we can either take actions ourselves or we can seek collaborative action with others to address that and still build this project as the public has asked us to do.”
It was clear that Grabauskas and HART board members were trying to distance themselves from any controversy that might spring up as a result of the announcement.
They blamed many of the issues on so-called “legacy items” that came about prior to the formation of the HART board on July 1, 2011, and before Grabauskas was hired in March 2012. These include the city issuing premature notices-to-proceed on construction and two lawsuits — one in state court and another in federal court — that attempted to halt the project.
But underlying the entire meeting was strong support for Grabauskas and his willingness to share both the positives and negatives of the project with the board and the public.
Board member William “Buzz” Hong even called Grabauskas’ presentation a “great Christmas present.” That sentiment was echoed by fellow board member George Atta, the head of the city’s Department of Planning and Permitting and a member of Caldwell’s cabinet.
Atta said the shortfall and the resulting hope to get more tax revenue to make up for it now allows for officials to open up the discussion about how to fund future legs of the project, which would include a spur from Ala Moana Center to the University of Hawaii at Manoa.
The financial adversity, he added, will also allow for more creativity when it comes to building the project and could result in a better final result. Public-private partnerships have been pitched as one idea to help make up for the shortfall by allowing businesses to take on some of the financial burden in exchange for development rights.
“When you hear that you have a negative delta of $500 million to $700 million that’s usually bad news, and it is,” Atta said. “But at the same time because of this bad news I think the action plan demonstrates that you have to think outside the box. Up until now HART has been focused on, on schedule and under budget.”
“The goal of this presentation really is transparency.” — Dan Grabauskas, HART executive director and CEO
Caldwell added to the chorus during a post-meeting press conference in which he talked about how the city and HART would react to the new projections by cutting costs, looking for partnerships and seeking new revenue.
He also told reporters that city and HART officials could have kept the projections to themselves until more construction bids were opened in 2015, which would have left the public in the dark even longer.
The mayor did not elaborate on why city officials would want to withhold such important financial information from the public.
“I committed when I became mayor to be open and transparent and I committed to being fiscally responsible and accountable as has HART,” Caldwell said. “So we did this end-of-the-year report in which we wanted to (alert) the board at HART and the public here that we have some challenges down the road and we’re going to address those challenges.”
In all, it was an odd display in messaging, but not one that’s foreign to HART or the Caldwell administration. HART officials regularly tout their attempts at transparency as do Caldwell and his staff. But it’s the accompanying spin that can add a layer of disingenuity to their statements.
For instance, the Caldwell administration has coined the term “compassionate disruption” to describe its efforts to clear Honolulu’s homeless off the streets in highly visible parts of town, including Kakaako and Waikiki.
The idea behind it is that making the homeless uncomfortable by seizing their belongings and criminalizing sitting and lying on sidewalks will help to move them into shelters. But these policies have been widely criticized by homelessness experts and advocates as cruel and ineffective.
In HART’s case, the announcement of the projected shortfall became the unveiling of a “budget action plan.” HART’s weekly email newsletter didn’t mention anything about the how much the project was anticipated to go over budget, instead focusing on a 10-point plan to “address some financial challenges.”
A press release from HART about Grabauskas’ presentation similarly avoided explicit mention of the estimated $550 million-$700 million shortfall. In both messages, the first statement from Grabauskas was about transparency.
But even all the accolades and talk of openness couldn’t hide the fact that HART officials still wanted to keep certain discussions behind closed doors.
After Grabauskas’ presentation, board member Don Horner asked his colleagues if they wanted to “huddle up” and go into executive session to “have a pretty candid discussion” about the latest projections.
Horner did not cite a reason under the state’s Sunshine Law for the executive session, although the agenda specified it could be to meet with attorneys.
The board’s decision to talk in private was unanimous.