Honolulu’s tardy, over-budget rail project could lose $1.55 billion in federal funds if it is not built as first planned all the way to Ala Moana Center, the Federal Transit Administration told city officials in a meeting in San Francisco this week.

In addition, the federal government will not come through with more money to help complete the project, leaving the city to look to the Legislature and other sources to bridge a funding gap estimated to be $1.5 billion.

In light of that shortfall, Mayor Kirk Caldwell in June floated the possibility of stopping the rail line at Middle Street for now and eventually completing it to Ala Moana Center.

In the mayoral campaign this summer, both Caldwell and his opponent, Charles Djou, have said they support finishing the rail line as planned and proposed possibilities for revamping the project to reduce costs or finding new sources of cash. But the city has not nailed down any commitments.

Honolulu City Council Chair Ernie Martin. 1 june 2016.
Honolulu City Council Chair Ernie Martin said he sees no other choice than to ask the Legislature for more money for rail. Cory Lum/Civil Beat

The FTA has given the city until the end of the year to come up with a new plan for the project, which was supposed to span 20 miles with elevated rail and include 21 stations from Kapolei to Ala Moana.

During meetings with FTA officials on Monday and Tuesday, the Hawaii delegation asked for more time to submit the revised plan, which could give the city a chance to make a case to the Legislature for more money. The session begins in January.

“We are very encouraged by the FTA’s response,” Caldwell said in a press release from the Honolulu Authority for Rapid Transportation.

 FTA Draws A Line

The FTA, however, told city officials not to look to Washington, D.C., for the money.

“Our federal partners made it clear that pausing the project at Middle Street is unacceptable and would risk all of the $1.55 billion owed the city” by the FTA, Honolulu City Council Chair Ernie Martin said in a press release. “They also turned down our request for additional federal funds, citing 60 other projects around the country currently under federal contract.”

Martin said he had been opposed to asking the Legislature for more money but sees now that “we don’t have a choice.”

“Our federal partners made it clear that pausing the project at Middle Street is unacceptable and would risk all of the $1.55 billion owed the city.” — Ernie Martin

In an Aug. 26 letter to Gov. David Ige that Martin released Tuesday, the Council chair suggests that the state commit part of its $1 billion budget surplus to rail. He also states that, in light of increased tax collections, the state no longer needs to claim a 10 percent share of the general excise tax surcharge that is the biggest source of funding for the project.

The leaders of the budget committees in the House and Senate, Rep. Sylvia Luke and Sen. Jill Tokuda, could not be reached for comment Tuesday.

City and federal officials agreed in San Francisco to contain costs, according to the HART press release. The project has been plagued by overruns, with the price tag ballooning from about $5.3 billion to $8.3 billion.

The parties also agreed to a review by transit experts to be completed by the end of the year and an updated financial plan. All of this is to be done while the FTA considers extending the deadline for the rail project’s revamped plan.

Earlier this month, the HART board and its executive director Dan Grabauskas agreed to part ways. The board appointed Mike Formby, Honolulu’s director of transportation, to take over until a permanent replacement is found.

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