For any other municipal project but rail, the damning news of the past few days would mean the guillotine.

Let’s recap:

  • Last Wednesday, federal officials privately told rail staff that construction costs for the project, originally estimated to be $5.2 billion, may grow to $8.1 billion by the time it’s completed in (hopefully) 2024, five years after the original completion date. The next day, rail leaders released a revised cost estimate made two months ago by the Honolulu Authority for Rapid Transportation: $6.9 billion. It took HART leaders another day to acknowledge the much higher federal estimate and the implications it might have for the 20-mile project.
  • Tuesday, Civil Beat’s Nick Grube reported that the newest appointee to HART’s board, Colbert Matsumoto, is the founder and chairman of a business with at least $44 million invested in multiple properties along the rail’s planned route. When Mayor Kirk Caldwell appointed the insurance and real estate investment executive to the HART board last month, he didn’t mention Matsumoto’s readily apparent conflicts of interest on the rail project. And though Matsumoto has a history of bringing order to troubled Honolulu organizations, his role and interests in Tradewind Capital Group stand to keep HART attorneys and the Honolulu Ethics Commission busy over his four-year term.

In the face of all this, Caldwell offers no serious assessment of what now must be done. Instead, the mayor who promised a rail project “on time and on budget” declined to speak with Civil Beat and complimented rail board members’ “openness and transparency,” simply for sharing basic facts with the taxpayers who are footing the bill for the largest public works project in state history.

HART Rail supports along Kamehameha Hwy as Kiewit workers assemble concrete forms for rail guideway supports. 14 april 2016.
The rail project’s guideway takes shape along Kamehameha Highway. Cory Lum/Civil Beat

Amid relentless increases in cost estimates with no end in sight, HART’s public affairs strategy seems to be to use pretty, shiny things to distract from the ugliness of cost bloat and the project’s recent, broadly negative city audit findings. “Hey, look – here’s the first rail car!” “We’ve completed another mile of guideway!” And so on.

It’s all enough to make even the most taciturn rail observer consider insurrection.

After all, it was only a year ago that the 2015 legislative session ended after Caldwell led an all-out push to extend the general excise tax surcharge funding the rail project. During often contentious committee hearings, Caldwell promised aggressive oversight and greater transparency for rail, then a paltry $900 million over its original budget.

With overruns now already nearly double that — and growing — and that audit last month sharply critical of HART and its ability to rein in costs, we wonder about the whereabouts of last year’s mayor, who argued so aggressively that giving the project more funding was the right thing to do.

The project has clearly reached a tipping point. Federal officials have now expressed their willingness to entertain a stark possibility once off the table: Shortening the rail route, as HART Chair Colleen Hanabusa confirmed Monday.

The groundwork for that may start being laid May 24, at a project oversight committee meeting, and at a special board meeting Hanabusa is scheduling to go over the revised estimates from the Federal Transit Administration. HART’s own revised cost estimates are due the week of June 6. For them to have any credibility, they’ll have to meet a level of transparency and disclosure not seen in the project thus far

We are among many watching these discussions critically to see whether a shortened version of the project is viable or whether, as some critics contend, it ought to be abandoned altogether, with the existing guideway torn down and a bitter farewell waved to sunken costs.

‘Likely’ Conflicts Of Interest

In the meantime, the appointment of Matsumoto raises numerous questions.

The well-known and even better-connected businessman has held plenty of high-profile appointments over the past 20 years, none more so than his role as court-appointed master for Bishop Estate/Kamehameha Schools during the “Broken Trust” scandal from 1996 to 2000.

That case, with its outrageous list of conflicts of interest that ultimately resulted in the resignations of the Bishop Estate trustees and wholesale management reorganization, gave Matsumoto intimate familiarity with the kind of relationships and business interests that unfortunately converge too often in Hawaii.

Given that, we were disappointed with Matsumoto’s attempt to split hairs over his own business interests and the rail project. His firm owns multiple properties that are a short walk to planned rail stops in downtown Honolulu and Kakaako, yet he and a spokesperson for Caldwell claim that because he simply “works for” Tradewind and “has no stake” in the properties, there’s no problem.

Rubbish. The chairman of a firm with at least $44 million in holdings along the rail route stands to benefit, directly or indirectly, from decisions HART might make as it considers construction in areas acknowledged by everyone to be the most costly and complex portion of the project.

Matsumoto’s firm owns multiple properties close to planned rail stops, yet he and Caldwell claim that because he simply “works for” Tradewind and “has no stake” in the properties, there’s no problem.

In addition to being privy to reams of information regarding the rail project before it becomes public, Matsumoto will have the opportunity to shape opinions and share information with fellow board members that could benefit Tradewind and its ownership position on the properties in question, as well as others along the rail route that it might acquire.

A statement released Monday on behalf of the mayor, in fact, anticipates conflicts, calling them “likely.” Matsumoto “will disclose and recuse himself whenever a conflict arises,” promises the mayor.

But how would anyone know? The annual financial disclosures HART board members are required to make to the Honolulu Ethics Commission are confidential. The only way information from them might become public is if the severely understaffed commission identifies a violation and levies a punishment.

All of which begs the question: Why was Matsumoto appointed to the board to begin with? If his company’s property holdings are likely to create ongoing conflicts, how much use can he be to the HART board at a time when it is in dire need of strong, engaged leadership? Even a man of his sterling record of service on big, complex matters can’t do much good sitting on the sidelines.

Unfortunately, the appearance of conflict that now hangs over his service is likely to last. Voters already suffering a crisis of confidence regarding the project are unlikely to feel any better about rail, particularly given the fact that neither Caldwell nor Matsumoto disclosed the Tradewind connection on their own.

More so now than ever before, the Honolulu rail project is a hot mess. The clock is ticking on Hanabusa as she quickly seeks to chart a viable path forward for the project.

As for Caldwell, with a new opponent in his race for re-election this fall, one who held the office previously, the mayor’s future may hinge on how effectively he responds to the new and emerging challenges of this project.

Without a better response than he’s mustered so far, his 2012 rail mantra of “on time and on budget” may turn into “out of time, out of budget and out of office.”

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