Last week, Mayor Kirk Caldwell proposed that city taxpayers’ “skin in the game” to help pay for the Honolulu rail project should grow from $161 million to $215 million.

A measure moving through the Legislature could put the city on the hook to cover even more.

With House Bill 2403, state leaders aim to take about $500,000 a year through 2030 from the Mass Transit Fund, which was set up last year as part of the state’s $2.4 billion bailout plan to manage rail revenues, and give it to the Hawaii Department of Transportation instead.

The money would cover DOT’s own rail-related duties — federal law requires the state agency to monitor safety along the rail project. However, the federal dollars that have helped support that effort thus far have expired and DOT says there’s no guarantee it’ll get more.

Honolulu Rail HART Train Car
Honolulu’s 20-mile rail project is now expected to cost about $9 billion. Legislation moving at the Capitol could require the city to cover more of that cost. Anthony Quintano / Civil Beat

The measure swiftly passed the House without a single “no” vote or even a “yes” with reservations.  Now, it awaits approval in the Senate.

Rail leaders are worried about what this could mean, particularly at a time when the project’s proposed recovery plan is under heavy scrutiny from the Federal Transit Administration.

Taking that $6.5 million total out of an already stretched recovery plan about six months after it was put together “would renew concerns of the FTA regarding the local funding commitment for the Honolulu Rail Transit Project,” HART said in its written testimony against the bill last month. (State leaders erroneously reported that HART testified in favor of the bill.)

On Feb. 22, draft language for a HART resolution opposing HB 2403 went further, stating that its federal partners already are worried. The FTA “has expressed concern regarding the local funding commitment for the Honolulu Rail Transit Project,” the draft read.

The HART board approved the resolution but softened some of its language after meeting in closed session. On Monday, the rail agency declined to provide the changes to the resolution because the board hasn’t approved the meeting minutes yet. An agency spokesman suggested catching replays of the meeting on Olelo later this month instead.

In the long run, the state’s largest-ever public works project could lose some or all of the federal dollars helping to hold its budget together if the FTA doesn’t approve rail’s recovery plan.

Rail’s longtime federal watchdog has already expressed its concerns about whether the funding listed in the recovery plan will be enough to build all 20 miles and 21 stations, and HART’s  recovery plan doesn’t account for handing over $6.5 million to DOT safety oversight.

HB 2403 could eventually compel the city to cover that money on top of the $215 million that city taxpayers already are on the hook for.

That might not seem like a lot for what’s currently estimated to be a $9 billion project, but a total of $6.5 million could over 13 years could significantly impact the city budget, according to Wes Frysztacki, director of the city’s Department of Transportation Services.

HART Board member Wes Frysztacki
Wes Frysztacki, HART Board member, heads the city’s Transportation Services Department and says a rail-related bill could impact his agency’s ability to buy new busses. Cory Lum/Civil Beat

“That’s eight electric buses that the city will not be able to buy,” Frysztacki, who sits on the HART board, said at that group’s Feb. 22 meeting as members discussed the resolution in public.

Meanwhile, city finance officials last week downplayed the impact of already having to absorb $54 million more in rail costs if Caldwell’s budget proposal is approved by the City Council. They plan to cover the expense using long-term debt financing, paid back over 25 years. If they were to take that money out of the annual operating budget instead, it would certainly affect city services, they said.

In prior years, HART reimbursed DOT about $175,000 annually out of rail’s budget for the state’s safety duties, according to project officials.

However, in August the FTA told HART to stop reimbursing DOT for its oversight due to conflict-of-interest concerns. Therefore, HART didn’t include that money in its recovery plan a month later, according to Robert Yu, the rail agency’s chief operating officer.

Now that the state gets control of the rail dollars first, state officials say that the conflict-of-interest issues have been resolved. Some HART board members aren’t so sure.

“I don’t see how this addresses conflict of interest,” HART board member Ember Shinn said Feb. 22.  “We’re so comingled at this point with (the state’s $2.4 billion rail bailout package) that I don’t see how there could be sufficient separation.”

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