Many people can recall Boston’s “Big Dig,” the nation’s largest infrastructure fiasco with a final price tag of about $15 billion. Surprisingly, Honolulu is building a rail system that’s expected to cost at least half the cost of the Big Dig. On a per-capita basis, this will be the nation’s largest infrastructure fiasco.

Despite a preponderance of evidence that Honolulu’s rail will do little to mitigate chronic traffic congestion on the island of Oahu, the project garnered a bare majority (50.6 percent) of public support in a 2008 referendum. Despite a couple major lawsuits, it completed the Federal Full Funding Grant Agreement process in 2012. (A summary of the highlights of Honolulu rail’s development can be found in my blog.)

What are the major causes of this project failure-in-progress? First is the local political preference for a “gravy train.” Why build a $1 billion taxpayer project such as bus rapid transit when you can build a $5 billion rail project?

Rail supports located along Kualakai Parkway. Kapolei. HART. 17 june 2015. photograph Cory Lum/Civil Beat
Rail supports located along Kualakai Parkway in Kapolei. Costs for the project continue to spiral upward. Cory Lum/Civil Beat

Second is local decision-making incompetence in terms of having a clue about the constructability, cost and payoff of heavy rail. Decision makers paid client-focused consultants to tell them what they wanted to hear.

And third is the Federal Transit Administration’s project-approval-by-politics and vested interest in transit empire expansion.

A major infrastructure project is considered a failure if it exhibits at least two out of three bad outcomes: 1) large cost overruns, 2) long project delivery delays and 3) much lower usage than forecast. Tren Urbano in San Juan, Puerto Rico, is a peer project that the Honolulu Authority for Rapid Transportation will likely match in failure to meet targets. Tren Urbano’s actual construction cost was 80 percent over the planned estimate, and its ridership has been only one quarter of what was projected. HART rail and Tren Urbano were planned by the same consultant and had the same oversight from the FTA.

At the end of 2015, five miles of the HART guideway and the rail yard appeared to be complete. HART, the voter approved “independent authority” that runs the project with many of its budget strings controlled by the Honolulu City Council, claimed a 25 percent project completion, although 15 percent is a more realistic estimate given what can be seen on the ground.

Several segments and columns have suffered large cracks, concrete delamination and segment misalignment, and in less than two years, the guideway construction company (Kiewit) submitted 40 work change orders and recently demanded a $20 million price adjustment.

Then on Jan. 5, HART discovered an (unbelievable) annual cost escalation of 10 percent and increased the cost of current contracts by another $240 million. Yet these increases are minor compared to the total escalation of cost figures.

A world authority for analysis of big infrastructure projects is Oxford University professor Bent Flyvbjerg whose “Over Budget, Over Time, Over and Over Again: Managing Major Projects” and “Megaprojects and Risk: An Anatomy of Ambition” have detailed the consistent flaws in big project development and have identified rail projects as particularly susceptible to these flaws.

One of the flaws is strategic misrepresentation, or cleverly worded lying to the public and decision makers, such as HART board members and the Honolulu City Council members, none of whom have any expertise in rail. As Flyvbjerg’s research has shown, costs tend to escalate as projects go from planning to design, to initial construction and finally to completion. It’s the rule rather than the exception.

However, project advocates including the FTA turned a blind eye to facts and in 2009 presented to the people of Hawaii a gem of strategic misrepresentation that simply fit the political line that the proposed 20-mile rail will cost $4.6 billion, as applicable during the 2008 rail referendum. This FTA-sponsored report contains one point of truth: There is a 10 percent chance that rail ultimately will cost about $10 billion. This is where HART construction costs are headed.

One would think that only three years into construction, with only about 15 percent of the project completed and only about half of the project gone to bid, HART would be sitting comfortably on a pile of money generated by a general excise tax surcharge that has been collected since 2007 (about $140 million per year) plus $1.55 billion from the Full Funding Grant Agreement.

Not so. In late 2014, HART announced a $910 million expected shortfall and lobbied the Hawaii Legislature to extend the 0.5 percent surcharge from the end of 2022 to end of 2027.

A smart mayor would sue the FTA for its negligent cost data representations, which were used by city mayors to manipulate the public and City Council votes of approval.

In another move of strategic misrepresentation, rail planners pretended that the rail is like an electric car that one buys and then goes home and plugs in, just as rail will “just” plug into the city grid. However, rail’s 30 megawatt to 50 megawatt power draw is a major requirement. The utility’s reaction was unpleasant for HART, which is now negotiating another expensive arrangement.

The combined cost of substations, a power generation agreement and the (still in limbo) airport utility relocation tasks are likely to cost about $500 million beyond the construction cost escalation charge of $240 million, bringing the known total to $6.9 billion with none of the 21 stations constructed and the second half of the project not gone to bid.

A smart mayor would sue the FTA for its negligent cost data representations, which were used by city mayors to manipulate the public and City Council votes of approval.

Looking at the bigger picture for Honolulu which includes a $5 billion consent decree with the EPA for secondary sewer treatment, increasing dependency on imports, including 90 percent of our food, with prices escalated by the Jones Act requirements, and the nation’s fifth worst unfunded pension liability, the future is worrisome. At best, Honolulu will experience large increases in taxes and congestion; at worst, those realities plus bankruptcy.

The second half of the project includes complex construction through urban Honolulu. There are discussions to terminate the project at the Middle Street transit terminal, which is at approximately the 16th mile of the rail route. This is a welcome possibility because Honolulu would be spared heavy construction and debilitating lane and road closures that would be deleterious to general economic activity and tourism.

But local leadership appears to be too weak in taking on FTA and sparing Honolulu from crippling rail construction congestion and cost. I expect that the last four miles of rail from Middle Street to Ala Moana Center will cost $1 billion each in combined construction costs and economic losses. The option of a 16-mile route should be given a serious consideration.

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