The Honolulu City Council Budget Committee passed a measure Wednesday to extend for five years a 0.5 percent surcharge on the general excise tax to pay for the escalating costs of the $6.6 billion rail project.
It was one of several votes needed before the extension would be finalized. Until then, council members made it clear that they will be demanding more transparency and accountability from the Honolulu Authority for Rapid Transportation that is overseeing construction.
“It’s all about restoring public trust in the project,” Council Chairman Ernie Martin said during Wednesday’s hearing. “The tough questions have to be asked. For us to step out of the way and allow this to go forward without exercising our due diligence is irresponsible.”
Martin was responding, in part, to Honolulu Mayor Kirk Caldwell, who earlier this week urged the council to move quickly on passing the GET extension for rail. The Federal Transit Administration, which has promised the city $1.5 billion to help build the project, has threatened to withhold some of that money until the tax extension is passed.
But Martin has said that the city cannot be held hostage by the FTA grant, which requires the city to build a 20-mile, 21-station system with 80 train cars. Anything short of that and the city could be forced to pay back the grant money it has already spent and forego any additional funds that were on the way.
Budget Committee members ultimately passed Martin’s proposal to extend the GET from 2022 to 2027 with a $910 million cap on spending, an amount that rail officials say is not enough to cover current shortfall estimates for the project.
Martin’s proposal also included additional accountability measures that would require HART to provide more detailed financial information to the City Council. It would also require HART to disclose how much money individual subcontractors were being paid on the project.
Caldwell and HART officials have said they support Martin’s proposal in principle, but that they wanted more flexibility with the cap. They say they need the full amount of money from the surcharge extension — estimated to generate about $1.5 billion in revenue — so that they can complete the project.
Anything less and it might put the FTA money at risk, Caldwell has said.
UPDATE: The mayor reiterated that stance Wednesday, issuing a written statement saying he appreciated the council’s action but that he still expects more to be done.
“While we’re supportive of the five-year extension, we believe that the cap passed is too restrictive, and we look forward to working with the Council at reaching a more reasonable measure,” Caldwell said.
Not all City Council members agreed with placing the cap on future GET surcharge revenues. Council members Brandon Elefante, Ron Menor and Ikaika Anderson — none of whom actually sit on the Budget Committee — all expressed reservations Wednesday about the cap since it doesn’t cover current estimated costs.
But the council members also said it’s important to hold HART accountable in light of continuing cost increases. Anderson, in particular, said he wants the City Council to play a more active role in setting HART’s budget. He even floated the idea of introducing legislation that would require all future change orders above $500,000 to be approved by the council.
“We know that the projected budget shortfall that HART presented to this council of $910 million is no longer an accurate figure,” Anderson said. “But I do remain concerned like the rest of us sitting here that the projections given by HART seem to change depending on when we ask them for the projections.”
Several council members have expressed their frustration with the ever-changing cost estimates to complete the current project, which will run from East Kapolei to Ala Moana Center.
Last December it was announced that the project faced a $910 million shortfall. The Legislature approved extending the GET surcharge for five years based on that figure. But two months after Gov. David Ige signed the extension into law HART announced additional delays and cost overruns. A month later the estimated total cost of the project — originally set at $5.3 billion — eclipsed the $6.5 billion mark.
Council members made clear they still intend to ask a lot more questions of HART and the administration about the project in the coming months.
Some are uneasy that HART still doesn’t know how much it will cost to build the final 10 miles of the project, which will stretch from Aloha Stadium through downtown to Ala Moana. HART is in the process of bidding the contracts for the work and is expected to have that process completed by June.
“It’s a great time for all the council members to really ask as many tough questions as we can,” Councilman Trevor Ozawa said during Wednesday’s hearing.
Ozawa said he also wants more information from the city administration, and particularly Caldwell, about his recent meeting with the FTA about the possibility of losing federal grant money if the GET surcharge isn’t extended.
Ozawa and others, including Councilman Joey Manahan, were concerned that Caldwell wasn’t at Wednesday’s hearing to talk about his meeting with the FTA. Ozawa said he didn’t appreciate having to get details about the meeting from news outlets that received a press release about the mayor’s visit last week.
“I do wish that he would communicate more clearly with us as a team player,” Ozawa said, “because we represent the city collectively.”
Also Wednesday, the full City Council held a special meeting to approve the sale of $450 million in commercial paper, $350 million of which can be used as a line of credit for the city’s rail project.
The council had already passed the measure approving the debt in 2012. But a recent lawsuit has called into question whether that vote was valid since several council members had not declared possible conflicts of interest before voting on key rail-related measures.