In yet another big blow to Honolulu rail, the city announced Friday that it is pulling out of the effort to land a private-sector partner to complete construction and operate the 20-mile system during its first 30 years.

That doesn’t mean that the so-called “P3″ procurement for rail is dead. Technically, it’s up to the Honolulu Authority for Rapid Transportation to cancel, since it’s the lead agency on the procurement.

The semi-autonomous rail agency’s leader said they’re still trying to find a way to move forward on a process that has already taken two years.

“While the City has announced its withdrawal, I need to emphasize that HART is not canceling the procurement and is instead considering its options as to how best to now move forward with the construction … and completion of the project,” HART Executive Director Andrew Robbins said in a statement Friday.

HART rail construction at the Daniel K. Inouye International Airport during COVID-19 pandemic. September 18, 2020

HART rail construction around the airport. On Friday, city officials announced they’re no longer participating in the P3 procurement to help get rail to Ala Moana Center.

Cory Lum/Civil Beat

Nonetheless, Robbins and HART have previously stated that in order for the P3 deal to work, private companies would seek the long-term operation component, not just the construction.

Those rail operations are the city’s responsibility, not HART’s, and it’s why the city had joined the procurement.

A press release from Mayor Kirk Caldwell’s office on Friday said that the city has informed rail’s federal partners at the Federal Transit Administration that it’s no longer participating in the P3 effort. It didn’t offer more details because the procurement is still active.

In July, one of the construction companies vying to finish rail under a P3 deal, Tutor Perini Corp., told investors that it had submitted a more than $2 billion proposal, although it didn’t say what that covered. HART had budgeted around $1.4 billion for the construction component.

The P3 award has been characterized as the linchpin to keep the rail project going. It would secure a contractor to finish the project’s final four and most difficult miles, as well as a transit hub at Pearl Highlands. The FTA also set an award within rail’s budget as a condition for releasing the project’s remaining $744 million in federal funds.

The city’s announcement comes one day after HART’s board was briefed on alternatives should the P3 procurement fail.

Rail officials said that a new procurement would probably take more than a year.

They also noted HART already canceled an earlier procurement in 2016 to build those last four miles into town. Starting over would mean a third procurement, and some companies might be wary to spend the millions of dollars necessary to put forward a proposal, they said.

The joint P3 procurement has been led by Robbins and Manuel Valbuena, the city’s deputy director at the Department of Budget and Fiscal Services. The two officials have served as the chief procurement officers for the P3 deal.

Robbins has touted the P3 approach as a way to spare taxpayers from much of the remaining financial risk on a project that’s already seen some $4 billion in cost increases so far. On Thursday, HART officials said the procurement model could help ensure smooth, quality construction since that private partner would also eventually run the transit line.

Sarah Allen, the state’s chief procurement officer, also briefed the HART board Thursday. She said that while she doesn’t know any of the specifics of the P3 procurement she could say that HART and the city had other options available under state code to try and award some sort of contract.

Valbuena briefly spoke at the HART board briefing Thursday to say that the city disagreed with the rail agency’s presentation, although he did not offer much detail. He stressed that Allen didn’t know the particulars of the P3 procurement. About 24 hours later, the city announced it was pulling out of the effort.

“HART is very disappointed in the City’s decision to withdraw. World class teams of developers and contractors stand ready to complete the project for the people of Honolulu,” Robbins said in his statement. “After nearly two years of detailed work on the current City Center procurement, HART does not consider it in the public interest to walk away at this point, especially since the Hawaii Procurement Code provides opportunities to achieve a successful contract award.”

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