For a second year in a row, local rail leaders have approved a recovery plan that looks to get the island’s rail transit project back on track following years of runaway costs.

But it’s still unclear whether rail’s federal partners will accept this latest attempt and, accordingly, release hundreds of millions of dollars needed to finish building to Ala Moana Center.

The Honolulu Authority for Rapid Transportation board voted unanimously Thursday to approve its new, $9.19 billion plan, a price tag that includes finance costs. The agency approved its earlier version last year, but it ultimately failed to secure the buy-in needed from the Federal Transit Administration.

The version passed Thursday looks to address the FTA’s lingering cost and schedule concerns, and to convince the agency to release rail’s remaining $744 million in federal funding.

HART Rail Guideway being built near Aloha Stadium.

Oahu’s rail guideway taking shape near Aloha Stadium.

Cory Lum/Civil Beat

Specifically, recovery plan “2.0” includes the extra $134 million that the FTA believes will be necessary to finish the state’s largest-ever public works project. It also pushes the full 20-mile transit line’s opening from December 2025 to September 2026, which the FTA considers to be a more realistic date.

HART officials disagree and maintain that they can deliver rail without those extra dollars and get it done by December 2025. Still, they’re looking to avoid being held in breach of contract by their federal partners — a move that could cost them some or all of their $1.55 billion in federal dollars.

“FTA will need to review the Recovery Plan to ensure it is reasonable and sufficient,” the federal agency offered in an email Thursday.

In September, the agency, running out of patience, gave HART until Nov. 20 to address the $134 million gap. In approving the recovery plan, the HART board got that done at its final meeting before the FTA’s deadline.

Here’s a table from the 2017 version of the recovery plan that broke down rail’s budget:

And here’s the new budget in the new recovery plan, with the numbers the FTA would want to see: 

The updated table includes the FTA’s required $134 million. It also shows $31 million more in financing costs. To cover that, HART finance officials have projected that rail will receive $188 million more in state tax revenues than they did in their 2017 estimates. That’s largely based on the updated collections of those sources, according to HART Chief Financial Officer Robert Yu.

HART’s board members approved the recovery plan with no discussion Thursday.

Dispute Over Rail Dollars

They did discuss at length, however, an emerging dispute with the state comptroller’s office.

Under Act 1, the rail’s financial bailout passed by state leaders last year, the comptroller has the discretion to review the rail project’s invoices and make sure the expenses are construction-related before those dollars get released to HART.

On Thursday, Yu told the HART board that the comptroller’s office, part of the state’s Department of Accounting and General Services, has rejected five invoices totaling between $600,000 and $700,000 so far. Those bills mostly relate to rail’s future fare-collection system and road repaving along Kamehameha Highway.

The problem, Yu explained, is that those are merely the first invoices for larger contract packages that could eventually total more than $30 million in work. If DAGS continues to reject those invoices, HART and the city could be left to cover that work instead.

HART Board Member Terrence Lee questions the Mayor during meeting at Kapolei Hale.

HART Board Member Terrence Lee asked about the agency’s dispute with the state over rail construction dollars.

Cory Lum/Civil Beat

Part of the issue, Yu told the board, is that the fare-collection system will be shared with TheBus — and right now all of the development and testing for that system is happening on the public system. DAGS thus questions whether it’s a legitimate rail expense, Yu said.

“I can understand where they’re coming from, because right now all the work is being done on TheBus — the testing is being done on TheBus,” Yu said. “But the reality is … whatever testing’s being done also applies to rail too.”

Yu said that HART hopes to discuss the issue with DAGS staff soon.

In an email Thursday, DAGS officials said they’re simply complying with state law.

Kiewit Contracts Settled

The board also agreed to a $13.2 million negotiated settlement with Omaha-based Kiewit Infrastructure West. HART officials said that would resolve all of Kiewit’s remaining claims on its construction work across West Oahu, essentially wrapping up the rail project’s first three major construction contracts, dating back to as early as 2009.

Kiewit built the rail project’s first 10.5 miles of elevated, concrete-and-steel guideway, as well as the system’s rail operations center in Pearl City. Insiders in 2016 described the relationship between Kiewit and HART as acrimonious, asserting that the construction firm was “fed up” with the city.

One former project consultant said Kiewit’s Honolulu rail contracts were costing the company $100 million. Despite having built the first half of the guideway, Kiewit ultimately opted not to bid on the next major stretch of guideway and station construction.

Instead, Shimmick Traylor Granite Joint Venture is building the stretch, from Aloha Stadium to Middle Street. HART officials say that work is proceeding smoothly.

Kiewit’s three West Oahu contracts were originally awarded for a combined $1.05 billion. But schedule delays and missteps helped to drive that price up by more than $290 million, HART records show.

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