The Honolulu City Council took a notable first step Wednesday toward revoking the city’s remaining $144 million that has been committed to help complete rail.
The vote to approve Bill 71 on the first of three readings required to pass was unanimous. It would remove the city’s $214 million rail-construction subsidy, minus the $70 million that’s already been incurred in earlier city budgets.
There was no discussion Wednesday. On a council composed mostly of rail supporters and several project opponents, no members registered any objections or reservations.
The unified move was a shot across the bow from city leaders at the Honolulu Authority for Rapid Transportation and the agency’s handling of a multibillion dollar transit project that’s fallen into disarray in recent weeks.
Utility relocation work has stalled amid a lack of complete designs. The city also withdrew from the effort to award rail’s last remaining major construction contract under a public-private partnership, or “P3,” that would have included a 30-year operations and maintenance deal.
It was the city’s P3 withdrawal that prompted Kalihi Councilman Joey Manahan, a staunch rail supporter, to introduce Bill 71 last week, he said after Wednesday’s meeting.
Rail’s latest disarray is “alarming,” Manahan said. It puts the city at financial risk if city taxpayers are still obligated to pay the remaining $144 million amid so much uncertainty.
Manahan expects the project will need more money — and he said city and rail leaders would likely have to approach the state for another tax extension. Getting such an extension amid the economic devastation wrought by the COVID-19 pandemic would be difficult, he acknowledged.
Nonetheless, until there’s a clear path forward, the move to withdraw the city’s commitment is warranted, Manahan said.
City leaders reluctantly agreed in 2017 to pay up to $214 million toward rail construction. State leaders sought that money as “skin in the game” when they passed a more than $2 billion bailout package for the cash-strapped transit project.
It’s not clear how the Federal Transit Administration will react to the city moving to withdraw those dollars, however. The $214 million is also part of rail’s recovery plan, which the FTA required as a condition for the city to hold on to its rail funding.
Rail is now at least seven years behind schedule, and that’s left the city in breach of its funding contract with the FTA. The federal agency hasn’t released any of Honolulu’s remaining $744 million since 2015. The city and HART have been trying to get that funding released.
Some $250 million is currently slated to lapse at the end of the year.
Manahan said he hasn’t discussed the city’s move with the FTA. The project’s city, state and federal partners all need to meet and discuss how to move forward, he said.
Even if the city removes its rail subsidy, it still remains at financial risk for the project’s construction problems. It’s on the hook for any budget increases under the terms of the state’s 2017 bailout package, Manahan said Wednesday.
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