Local rail officials took an unprecedented step among all other major U.S. transit projects last year when they embraced a public-private partnership, or P3, midway through construction.
Now, there’s no turning back.
The Honolulu Authority for Rapid Transportation has scrapped its earlier plans for a Plan B, or off-ramp, as agency leaders described it, should the P3 strategy to get rail all the way to Ala Moana Center fail.
Such an exit strategy is no longer necessary, they say, now that P3 procurement is well underway with at least two parties bidding for the transit project’s last major contract into town, for construction work valued at around $1.4 billion.
“At that time, we didn’t know if we would get bidders interested in that proposition,” HART Executive Director Andrew Robbins told Civil Beat last week. “We’re well beyond it.”
Language referencing an off-ramp was scrapped entirely from the agency’s latest strategic plan, Robbins said, because bidders wondered whether that meant cancelling the whole rail project.
Now, the big question is whether those bids will come in on budget, he said. HART puts the construction cost of the entire 20-mile, 21-station project at $8.16 billion. The agency has provided so-called affordability caps to rail’s latest bidders to signal how much taxpayers can afford to spend.
If the bids still come in too high, HART has “various levers, if you will, that we can pull” — alternate concepts that they could consider, to avoid starting the procurement from scratch, Robbins added. The bidders, HART officials note, have invested heavily to make their bids succeed.
Under the P3 model those firms would design, build and finance their own construction work. The city would only pay them via taxpayer dollars after they hit certain milestones. The goal is to transfer much of the risk to the private sector and keep costs in check, following years of cost increases that have nearly doubled rail’s multi-billion dollar budget.
The private firms bidding, meanwhile, are seeking a 30-year operations and maintenance arrangement with the city to make the deal work. It’s not clear yet how Hitachi Rail Honolulu, which already has a deal to operate the system for up to 10 years, would play into the arrangement.
The award process, however, keeps getting pushed back.
Instead of HART receiving bids on Dec. 6 they’re now expected at the end of January. The bidders say they need more time, and it’s possible that schedule could get pushed back even further, Robbins said last week.
At this stage of the procurement, HART must pare down to no more than three parties bidding for the contract to build the final 4.1 miles of elevated concrete-and-steel track and eight stations into town, as well as a transit center and a 1,600-space parking facility in Pearl City.
HART, under state procurement law, can’t confirm how many finalists there are. But Robbins has said there are at least two.
The finalists have asked more than 600 design- and construction-related questions, seeking more details on acceptable rail-column locations and available sites for them to work among all the utility-relocation that has to happen in town, Robbins said.
Hitachi, which is creating the transit line’s signaling system and driverless trains, also has to answer questions “but they’re a little bit behind our timeline to be frank,” Robbins told the HART board last week.
It’s a good sign that they’re hashing out the details now instead of later, after the bids come in, Robbins said.
Still, some city leaders remain wary of how the P3 process will play out.
Honolulu Councilwoman Heidi Tsuneyoshi introduced a resolution earlier this month that would have the City Council approve the contract first. HART and the city are procuring that contract jointly because of the operations and maintenance component. But Tsuneyoshi said Tuesday she couldn’t necessarily trust Mayor Kirk Caldwell’s administration to keep the council in the loop.
“The administration does have a seat at the table with the HART board. They’re hearing everything that’s going on. We don’t,” Tsuneyoshi said Monday. “It’s a situation of transparency … to be able to have the same information” since the council approves the city budget.
“I don’t think it would be afforded to us just based on asking for it,” she added. “For many years we’ve asked for information … and we get general answers but we don’t get specifics. Without specifics it’s very hard to figure out what we’re obligating the taxpayers to.”
That committee will consider another rail-related resolution, also introduced by Tsuneyoshi, that calls on the U.S. Interior Department to postpone its approval of a land swap involving the rail line’s future operations center.
The city already spent more than $281 million to build that operations center on a 56-acre property commonly known as the Navy Drum site — even though it doesn’t own the land. It aims to acquire the site from the Department of Hawaiian Home Lands via a land swap, where the city would give DHHL some 50 acres of property at Varona Village and in Ewa Beach.
The Navy Drum site is valued at more than $21 million while the city’s Kapolei-area property is only valued at around $5 million, according to Tsuneyoshi’s resolution. It calls on the land swap to be put on hold until HART and DHHL can hold hearings on the issue, including the central question of whether Native Hawaiian beneficiaries are getting a fair deal.
“This is really acknowledging the state that we are in right now with a lot of different issues, with Mauna Kea and other issues that are coming up,” Tsuneyoshi said Monday. “The beneficiaries especially feel like the process is somewhat broken and they aren’t fully apprised of the situation.”
Former Hawaii congresswoman and HART board chair Colleen Hanabusa flagged the land swap as a potentially serious problem for rail back in 2015, as construction on the Navy Drum site neared completion.
“It’s not necessarily a slam dunk that they’re going to find this in the best interest of the beneficiaries,” Hanabusa said at the time, referring to the Interior Department.
Nonetheless, HART’s then executive director, Dan Grabauskas, downplayed the situation.
“All thumbs are up. It’s just a matter of process,” Grabauskas said in 2015. “Negotiations are done. It’s really just paperwork at this point.”
The controversies that have engulfed Mauna Kea, along with projects in Waimanalo and Kahuku, show there’s a demand for more public scrutiny and involvement in such matters, Tsuneyoshi said.
“We need to be cognizant of that,” she said Monday. “We have to realize that the people really don’t feel like their voices are being heard and respond in a proactive way.”
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