The Federal Transit Administration is withholding its next allotment of $250 million in grant money for the Honolulu rail project until the City Council approves a five-year extension of the general excise tax surcharge that’s paying for majority of the $6.6 billion project, Mayor Kirk Caldwell’s office said in a statement Friday.

Caldwell is currently in Washington, D.C., where he met with FTA officials to talk about the rail project, which is underfunded and over budget.

Mayor Kirk Caldwell says it's critically important that the Honolulu City Council pass a rail tax extension so that the city doesn't lose federal grant money.
Mayor Kirk Caldwell says it’s critically important that the City Council pass a rail tax extension so that the city doesn’t lose federal grant money. Cory Lum/Civil Beat

Caldwell said FTA officials made it clear to him that they expect the city to build all of the planned 20-mile, 21-station rail line from East Kapolei to Ala Moana Center. The city has been awarded a total grant of $1.55 billion from the FTA to build the project to those parameters.

“For me as mayor, I want that money from the federal government,” Caldwell said in the statement. “This is $1.55 billion worth of funds that we absolutely need, and we don’t want to go back to our population and say that you need to pay 100 percent instead of accepting the $1.55 billion. It’s critical that we pass the surcharge extension of five years that the FTA is waiting for.”

Council Chairman Ernie Martin recently floated the idea of giving up the $1.55 billion — which would require paying back nearly $450 million in federal funding that’s already been spent — in order to have more control over the project and its route.

Martin has also proposed placing a $910 million cap on revenues collected from the proposed tax extension, which officials say would not be enough to cover current projected costs.

Caldwell does not like either option, and believes all funds from the tax extension should go toward rail.

The City Council Budget Committee is expected to vote on the five-year extension Wednesday. After that, the measure heads to the full council before going back to the committee for another approval. If the committee approves the measure it will once again go back to the full council for a vote before heading to Caldwell’s desk for his signature.

Budget Committee Chairwoman Ann Kobayashi has said that she expects that process to play out into early next year.

A Honolulu Authority for Rapid Transportation spokeswoman said Friday that the agency did not want to comment on Caldwell’s announcement until it received official word from the FTA about the threat to withhold funds.

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