In 2010, New Jersey Gov. Chris Christie unilaterally pulled the plug on one of the nation’s largest public infrastructure projects.
The Access to the Region’s Core (ARC) project — an $8.7 billion rail tunnel under the Hudson river — was already under construction with $3 billion in federal financing already arranged.
But Christie, after learning that the project would likely cost at least $2.5 billion more than anticipated, decided it wasn’t worth continuing. New Jersey would have been responsible for the overrun, and Christie — shocking many — said he could not put the taxpayers “on what would be a never-ending hook.”
Honolulu’s perpetually beleaguered rail project is still at least $2 billion short on a price tag that is estimated to go as high as $9.5 billion. And in the absence of any decisive leadership, the state and the city are currently locked in a game of political chicken about how to pay for it — most likely leaving taxpayers on “a never-ending hook.”
Senate Bill 1183, the latest Senate bill, would fork over to the city the state’s administrative fee from the general excise tax (the so-called “skim”), but stipulates that the city needs to come up with the rest — some $500 million over the next 10 years.
Meanwhile, Honolulu Mayor Kirk Caldwell has said there is simply no way the city can come up with those funds — except for one time he said it could raise property taxes 14 percent, an option he now says he refuses to consider.
The House Finance Committee guided by Rep. Sylvia Luke is expected to take up the measure in the next couple weeks. But as the House makes its changes to SB 1183, it would behoove everyone — politicians, HART administrators and the general public — to keep Christie’s stunning withdrawal in mind.
Because despite protestations from Caldwell to the contrary, ambitious, large-scale public projects are by no means a foregone conclusion. If the people in charge don’t present a responsible plan to pay for their project — a plan that is articulated clearly and honestly to the public — then it simply does not matter if ground has already been broken, if money has already been spent, or if the project is a necessary public good.
When it comes to Honolulu’s rail system, we are by no means past the point of no return, and the public’s patience is running ever thinner.
All of which makes the city’s upcoming April 30 deadline to get a new plan to the Federal Transit Administration all the more important. Like the rest of us, the feds are demanding to know how exactly HART will overcome its multi-billion-dollar shortfall. Solutions could include securing the funding from the state, raising taxes on Oahu, or amending the rail plans to reduce costs, such as stopping the project at Aloha Tower instead of continuing all the way to Ala Moana.
But if the city doesn’t have a plan, or presents a plan that doesn’t offer “independent utility” — a.k.a., doesn’t offer residents any real use, like stopping the rail at Middle Street — then the feds can demand their money back, effectively killing the project entirely.
It is a high stakes moment in what has already been a long and arduous gamble. And unfortunately for Hawaii residents, there isn’t an obvious or palatable solution.
Because in order to “save rail,” it is now painfully obvious that we will either see property taxes increase dramatically on an island already plagued by the high cost of housing or we will see a halfhearted rail system — one that doesn’t even address the city’s worst traffic and does little to encourage ridership.
Moreover, by the time the project is finished, it seems very likely the commuter economy and traffic patterns around Honolulu will have changed entirely. Cliff Slater and Randall Roth’s recent argument in Civil Beat goes so far as to predict that rail “will be obsolete by 2040” — a not wholly unconvincing argument for anyone who’s driven in a new car with driver-assist technology.
But amidst the doubt, the confusion and the second-guessing, there are glimmers of hope.
Ulupono Initiative, an impact investment firm, recently released a study about how potential public-private partnerships could help rail. While such partnerships can’t “address the funding gap” — taxpayers are still on the hook for that, sadly — they could help accelerate the project, eliminate costly delays and provide better budget predictability — all of which the current rail project desperately needs.
Ulupono’s suggestions might seem too little to late for a lot of taxpayers already fed up with rail’s ineptitude, but again, the tale of the ARC project in New York and New Jersey provides a helpful moral.
Governor Christie was lambasted when he decided to scuttle ARC, after all. Columnist Paul Krugman called the decision “destructive and incredibly foolish” since there was such an obvious need for the project.
But just because Christie pulled the plug on that specific project, with those specific funding terms, the idea and enthusiasm for a new tunnel didn’t go away.
Now, seven years on, there is currently a new Hudson rail tunnel project underway, one that dwarfs the initial plan as much as it improves it. Experts are calling the new plan (dubbed Gateway) a “better project” because it addresses less popular aspects of ARC, offers more cohesive solutions for commuters, and pulls in more stakeholders and cost sharers in more substantial ways.
The new plan is expected to cost more than twice what the original did, but there is already considerable excitement about it because the payout seems worth it (taxpayers will love and use what they’re paying for) and because the funders are all on the same page.
As the House moves forward with SB 1183 — or doesn’t — we’d encourage lawmakers to keep these lessons in mind. Because it’s not too late for Honolulu’s rail. It’s not too late to make it a project worth paying for, a project that inspires public confidence rather than scorn.
And because, most importantly, if we can’t get it to that ideal, it’s not too late to pull the plug and try again.
The Ulupono Initiative was founded by Pierre and Pam Omidyar. Pierre Omidyar is the CEO and publisher of Civil Beat.