One of the companies vying to finish Honolulu rail under a public-private partnership revealed itself during a recent quarterly earnings call, but the price its executive quoted vastly exceeds what city officials have budgeted for construction.
Ronald Tutor, CEO of Los Angeles-based Tutor Perini Corp. disclosed in a July 29 call with investors that his construction company is part of a team that’s competing against one other joint venture for rail’s P3 award.
As part of the deal, the team that’s selected would build rail’s remaining 4 miles and eight stations into downtown Honolulu. HART has estimated that construction work to cost around $1.4 billion.
However, during the call Tutor said his company’s bid was “over $2 billion.”
Jorge Casado, Tutor Perini’s vice president for investor relations, said Thursday that he couldn’t specify further what that $2 billion-plus price covered. It’s not clear whether it exclusively covers design and construction. The P3 deal is expected to also include a 30-year operations and maintenance component.
Tutor told investors that he expected the P3 award to occur sometime in the fourth quarter of the year. He said the joint venture his team is competing against consists of a Spanish company and two Japanese firms. He didn’t give their names.
The call took place five days after final proposals were due for the P3 deal.
“We are expecting a decision here,” Casado said. “We don’t know exactly when.”
Tutor Perini has contracts to help build California’s high-speed rail project, and extend underground metro rail lines in Los Angeles, New York and San Francisco. It also helped build Seattle’s new tunnel to replace the aging Alaska Way Viaduct.
Rail and city officials, meanwhile, have not disclosed who Honolulu’s P3 bidders are or where the procurement process stands since its most recent deadline to issue an award passed Aug. 27. They’ve even declined to specify how many teams were competing, citing the state’s procurement code.
They did say they would hold off if they needed to seek a better price.
The Honolulu Authority for Rapid Transportation declined to comment Wednesday on the Tutor Perini report, citing the procurement code. HART spokesman Bill Brennan did say in an emailed response that the agency “may permit revisions of proposals after submission and prior to award for best and final offer.”
HART could “also take other steps as permitted under the code for the purpose of making a contract award,” Brennan added in a subsequent email.
Agency leaders have said previously that they provided the bidders with so-called “affordability caps” to signal how much taxpayers could afford to spend. In October, HART scrapped development of an exit strategy should the P3 procurement fail.
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, HART Executive Director Andy Robbins said at the time.
HART board members don’t have oversight over the procurement, but they have been briefed behind closed doors on the process. In public meetings last week Vice Chairman Terrence Lee asked the agency’s chief financial officer how the project’s budget would be impacted if the P3 award doesn’t happen.
“I think we need to get ahead of things and not be reactive,” Lee said during the Finance Committee’s latest budget update. “I think we need to plan for the possibility that this P3 … is not going to succeed,” he said.
Rail’s price tag has nearly doubled since the city signed a financing agreement with the Federal Transit Administration in 2012. It’s increased from $5.26 billion to an estimated $9.1 billion, currently.
The project also faces an estimated revenue shortfall of some $450 million thanks to the COVID-19 pandemic, meaning rail could have yet another budget crisis on the horizon.
The P3 is a joint procurement with the city because the deal would also have the private partner run the 20-mile elevated and driverless rail line over its first 30 years.
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