As Honolulu City Councilman Ron Menor approached the chairman’s podium one last time before the vote that would inevitably oust him from that position, he turned to the clerk’s table and quipped: “Let’s keep it short and brief, alright?”

But the special meeting held Monday to replace him was neither short nor brief.

Instead, even before council members voted 5-4 to oust Menor in favor of Councilman Ernie Martin, they spent an hour debating the biggest financial issue facing the city and a key reason Menor was deposed: What to do about rail.

Outgoing City Council Chair Ron Menor before vote was taken.
City Councilman Ron Menor stands at the chair podium Monday, shortly before the council voted 5-4 to remove as chairman in favor of the previous chair, Ernie Martin. Cory Lum/Civil Beat

The city, for the first time in the history of the beleaguered transit project, is on the hook to cover $44 million in rail costs next year. It’s just the first slice of what’s estimated to be a $214 million city share through the life of rail construction, representing dollars that won’t be covered by state or federal funds.

The Honolulu Authority for Rapid Transportation doesn’t need that $44 million under its current cash flows, officials say. But rail’s partners at the Federal Transit Administration have insisted in private meetings that the city pay up anyway or risk losing its remaining $744 million in federal dollars, city leaders say.

Now, with a new chairman who generally supports rail but constantly challenges Honolulu Mayor Kirk Caldwell, the council must navigate the best way to budget the city’s rail share while keeping its bond rating intact.

New Chair Honolulu City Council Ernie Martin.
City Councilman Ernie Martin shortly before reclaiming the chairmanship Monday. Cory Lum/Civil Beat

“I’ve tried to foster greater collaboration and a more low-key … approach in our deliberations,” Menor told his council colleagues, before joining Ikaika Anderson, Joey Manahan and Brandon Elefante to vote against the chairmanship change. “In recent weeks the collegial spirit has dissipated as we encountered significant differences on organizational issues.”

Menor then asked his colleagues to “rise above personal differences and political ambitions” going forward. Councilwoman Kymberly Pine, the swing-vote in the coup and incoming vice-chairwoman, and Anderson, the outgoing vice chairman, are both considering running for mayor in 2020.

Martin, meanwhile, is running for Congress.

In interviews last week, Pine charged that the council’s female members saw credit for much of their legislative work stolen under Menor’s chairmanship. She also said she wanted the council to ask tougher questions of Caldwell on rail.

There is speculation at Honolulu Hale that Councilman Trevor Ozawa may replace Joey Manahan as the council’s budget chairman. On Monday, Manahan repeatedly pressed Martin and the new leadership to share their plan to cover the city’s rail costs. Martin responded that it’s “premature” to weigh in without further budget briefings.

Before the vote, Manahan also called on Caldwell’s budget and finance director, Nelson Koyanagi, to testify on the administration’s plan to cover the rail costs under its borrowing program.

Dept of Budget and Fiscal Services Director Nelson Koyanagi answers Honolulu City council members questions about the budget.
Department of Budget and Fiscal Services Director Nelson Koyanagi said the city should add its share of the rail costs to its capital improvement program. Cory Lum/Civil Beat

Koyanagi told the council it would make the most sense for the city to add the $44 million to its capital improvement program. Once budgeted there, the city won’t actually have to float bonds for those costs since HART doesn’t need the money, Koyanagi said.

“If you go out and get a line of credit (and then) don’t draw on the line of credit it costs you nothing,” Koyanagi testified Monday. “This is the same situation.”

But that’s in the short term. Koyanagi did acknowledge that HART will need city money in subsequent years — and that some of those costs would have to be covered in the operations budget.

Pine instead proposed the city use its $113 million in annual “carry-over” dollars, which are managed like a savings account, to cover the $44 million. Ultimately, since HART doesn’t actually need that money, the FTA’s demands could be satisfied by placing the rail costs in the budget there, she said.

Koyanagi said that would still lead to restrictions and cuts by other means.

“Things would slow down a lot, positions would not be filled,” he said. “It just would be very disruptive.”

Nonetheless, Pine believes the carry-over strategy might work.

Pine also wanted to see the FTA’s ultimatum in writing. So far, the closest thing to that is a Feb. 23 letter that Caldwell sent to FTA officials summarizing what they told him.

When Pine probed Koyanagi as to whether he thought “things went seriously wrong in our negotiations with the FTA,” the budget director replied that the “Trump administration is a different administration, and is not real friendly to the project.”

Anderson, meanwhile, said he wants to make “damn sure” that whatever the council decides in the months ahead won’t impact the city’s credit rating.

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Here’s copy of Mayor Kirk Caldwell’s Feb. 23 letter, which was also signed by the council’s then-chairman, Ron Menor, and its budget chairman, Joey Manahan. (A reader points out the letter should state “0.5% general excise tax (GET) surcharge,” not 0.05%.)

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