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The quest to finish building Honolulu rail and run it for 30 years with a public-private partnership is officially over, two years after project leaders embarked on that path hoping to get the price and schedule under control.
Instead, the beleaguered multibillion-dollar transit project currently faces more runaway budget costs, a schedule delay of as much as 13 years compared to the original 2020 service date, and a future more uncertain than ever.
On Friday, Honolulu Authority for Rapid Transportation Executive Director Andrew Robbins announced his agency would take immediate steps to cancel the long-touted P3 effort after his last-ditch attempt earlier this week to convince city leaders to rejoin that procurement failed.
“This is not a moment to celebrate,” Kirk Caldwell, the city’s outgoing mayor, said Friday after a two-hour meeting with Robbins.
When the city withdrew from the P3 effort “it was a very sad and depressing moment for me,” Caldwell said. “Since then, it’s how do we go forward?”
HART will now start its fourth attempt since the rail project’s inception to award a contract to build the elevated rail line into town.
With the city once again short on funding, the next procurement may not include all of the transit line’s remaining four miles and eight stations to Ala Moana Center. Both Robbins and Caldwell have separately suggested a “phased” approach will be needed to eventually get that far.
Robbins said Friday it will probably take another couple of months for HART to issue the next request for proposals — and then it will take another year or so to award the construction contract that has proven so difficult.
Precisely what caused the P3 pursuit’s failure hasn’t been disclosed, although one of the companies competing for the contract shared in an earnings call this summer that its proposal was hundreds of millions of dollars more than what HART and the city had budgeted for the remaining construction.
Manuel Valbuena, the city’s acting budget director and its chief evaluating officer for the P3 proposals, told HART in a letter Friday that the method remained too risky given rail’s severe cash shortage.
The city, which was to handle the operations part of the P3 deal, withdrew two months ago. Robbins and Caldwell have publicly clashed over that decision ever since. Robbins was steadfast that a P3 deal remained rail’s best option, even as most of the board that oversees him recommended that he stop.
That same board is now taking steps to replace Robbins once his contract expires at the end of the year.
On Friday, however, the outgoing mayor and the rail executive director with an uncertain future appeared in a joint press conference at Honolulu Hale and pledged to work on a plan forward in hopes of preventing $250 million in federal funding from lapsing.
At the HART board’s meeting earlier Friday, Robbins said that HART had spent at least $10 million on outside consultant work for the now aborted P3 pursuit. The local agency also saw at least two key personnel — deputy executive director for procurement Nicole Chapman and deputy director for procurement and consultant contracts Paula Youngling — leave HART during the P3 procurement process.
HART hopes to have a new estimate on cost and schedule by the end of the month, Robbins said. Details on the P3 proposals should be released soon, he added.
The HART board also voted unanimously Friday to increase next year’s proposed construction budget for the rail guideway through the Honolulu urban center to $2.3 billion. HART previously had estimated that construction work, which includes eight city center rail stations and a transit center at Pearl Highlands, would cost about $1.4 billion.
HART Chief Financial Officer Ruth Lohr acknowledged that with the failure of the P3 procurement, HART officials really don’t know now how much the city center guideway and station construction will finally cost.
“It’s to try to anticipate a larger swing in that amount, and hopefully overestimate, but until we know what that (estimate) looks like, we basically don’t have a set number,” Lohr told the HART board.
She said rail authority staff members are still working on developing a new estimate for the city center construction, but the City Charter requires that HART’s proposed budget be submitted to Caldwell by Dec. 1. The HART board meeting on Friday was the last board meeting before that deadline.
Dean Hazama, chairman of the HART Finance Committee said of the $2.3 billion estimate that “I think we agreed last week that that would be a good number at least to go with until we find out what would be a more, I guess, defined number.”
The board also decided to increase the budget for next year for the complex, much-delayed city center utility relocation work along the rail line down Dillingham Boulevard and through the city center by more than $200 million. But board members acknowledged that was also a guess.
That latest increase comes on top of a previous $235 million or so increase for that utility work announced this past May.
HART board member Glenn Nohara said HART plans to award contracts for that utility relocation work in the next 18 to 20 months, “so we need to have enough money in this category so we can do that.”
Lohr said HART staff are also developing a plan to complete the utility relocation work, and “of course we can’t determine what the estimate will look like if we don’t have a clear path on what the quantities and what the timeline would be, so my understanding is that they are still getting some of the plan in place to understand what is the best path, and that will help them inform what an estimate would look like.”
Lohr said her understanding is HART will have a firm plan in the first part of next year, but Hazama pointed out the budget needs to be submitted to the mayor and council before then.
HART board member Lynn McCrory wondered aloud, “Does it make any more sense to just go ahead and pick a number” for the utility relocation work, and then amend the budget later when the HART staff develops a better estimate.
Several board members agreed, suggesting it is clear the utility relocation work in the city center will cost more than the $639 million HART had already budgeted. “I think we need to add about $200 million to this number based on how our estimates have always been so low,” Nohara said.
“If we add $200 million, it brings it to $839 (million),” McCrory said. “Will we make it $850 (million), to just make it easy and we know?” The other board members agreed.
McCrory also expressed concern about the amount of contingency funding that has been set aside for the project, which is the cash cushion that can be used to cover any unexpected costs such as change orders. The board approved an increase in the budgeted unallocated contingency for the next six years from $87.8 million to $222 million.
The draft construction budget that HART staff prepared for the board’s consideration Friday lists the total cost of the 20-mile rail line and 21 stations as $9.862 billion. If the add-ons approved by the board Friday are included in the final budget next year, the construction budget for rail will total $10.2 billion, not including about $1 billion in financing costs.
Read Acting Budget Director Manuel Valbuena’s response to HART rejecting the agency’s call to pursue a P3 deal here:
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