In the spring of 2016, Dan Grabauskas was in the hot seat. Rail costs kept climbing. City leaders were fretting.

Within several months, he would resign as the Honolulu Authority for Transportation’s executive director under an agreement with the agency’s board, collecting a severance worth nearly $300,000.

“He believed, with the board, that it was time to move on,” former U.S. Rep. Colleen Hanabusa, then serving as the HART board’s chairwoman, said the day Grabauskas left the agency.

Privately, however, Hanabusa and several other board members were incensed. They believed Grabauskas had withheld critical budget details from them — and that he had committed fireable offenses, newly released records of the board’s executive session meetings reveal.

Executive Director/CEO HART Dan Grabauskas at HART meeting. 3 march 2015. photograph Cory Lum/Civil Beat
Rail costs kept rising under HART’s former executive director, Dan Grabauskas. Newly released records of closed-door meetings show agency board members believed he had withheld key budget information from them. Cory Lum/Civil Beat

They were further convinced he had misled city and state lawmakers about those budget numbers during hearings on the project’s mounting financial problems.

In fact, the records show HART’s board spent several months behind closed doors weighing whether to fire Grabauskas before they ultimately — and unanimously — settled on a $282,250 severance deal.

If they fired him, the board expected that Grabauskas would sue. “Ms. Hanabusa indicated that paying the severance would be inexpensive compared with other executive termination lawsuits,” minutes from the board’s June 16 executive session state.

A month after her comments, Hanabusa’s chief ally on the board, then-city Transportation Services Director Michael Formby, recommended that Grabuaskas “be let go without cause with the honor of resigning.” He left on Aug. 18.

Kealoha Scandal Led To Rail Records Access

The minutes of those rail executive session meetings, from April to August 2016, were recently released by the city because of the legal wrangling in a separate matter: the scandal involving Honolulu’s disgraced former police chief, Louis Kealoha.

In 2017, the Honolulu Police Commission deliberated on Kealoha’s controversial severance package in private. After the Civil Beat Law Center for the Public Interest sued to make those meeting details public, the Hawaii Supreme Court ruled that the commission had not been required to hold those discussions in executive session.

That ruling also applied to the approximately 17 hours that the HART board spent behind closed doors in the spring and summer of 2016 discussing Grabuaskas’ job performance and whether to fire him.

The city finally released copies of the HART meeting minutes with moderate redactions earlier this year. Civil Beat had requested them in March 2020.

They reveal just how much the board’s trust in Grabauskas had deteriorated by the time he left.

Further, board members believed that Grabauskas’ credibility had eroded with the legislators whose help they would need to rescue the project from yet another financial crisis.

“Mr. Formby stated that members of the legislature told him to not come back for a further (tax) extension, and if they do come back, to not come back with the same team,” the May 12 minutes state.

Several days after that private May 12 meeting, he and Hanabusa publicly disclosed that the rail project had gone severely over budget yet again. Their new estimates put the project cost at over $8 billion.

‘The Two Shits On the Board’

Grabauskas told Civil Beat in an email Friday that “I cannot comment on gossip or on statements that were made at meetings I did not attend” when asked about multiple issues raised in private by the board.

He added, “any characterizations of my actions while at HART as anything but earnestly conveying the best information we had at the time are flatly incorrect.”

Formby, however, told his board colleagues during their May 2016 executive session that Grabauskas had tried to prevent HART staff from warning the board about rail’s true budget peril while he simultaneously gave rosier assessments to city and state leaders.

The former rail director delivered “happy talk” to Formby’s boss at the time, Honolulu Mayor Kirk Caldwell, when briefing him on the project costs, Formby is quoted in the minutes as saying.

Specifically, HART staff had disclosed to Formby that the project could cost as much as $7.6 billion, he said, at a time when Grabauskas publicly put the cost at around $6.6 billion.

Transportation Director Michael Hornsby gesture2. 21 april 2016.
Michael Formby served on the HART board when he was the city’s transportation chief. Behind closed doors he was one of the board’s strongest proponents of removing Dan Grabauskas from the rail agency. He’s now a top official in the Blangiardi administration. Cory Lum/Civil Beat

Grabuaskas also “misrepresented” HART’s ability to deliver the full 20-mile project under a spending cap proposed by the City Council, Formby said.

Additionally, Formby said he was told Grabauskas had instructed HART staff to stop modeling rail cost estimates during the 2015 Legislative session when their models showed that costs were still climbing.

At the time, those lawmakers were crafting what would become the project’s first $1.5 billion bailout package. Less than a year later, rail would be short on funds again.

In the 2016 minutes, Formby said he had confronted Grabauskas about the rosier cost assessments. Grabauskas “became very angry,” accused Formby of playing politics, and walked out of the room, according to the minutes.

HART staff told Formby that Grabauskas had referred to him and Hanabusa as “the two shits on the board,” according to the minutes. (Separately, a HART employee told an independent investigator hired by the board that Grabauskas called some board members “shits.”)

Meanwhile, in the months before his ouster, Grabauskas indicated that much of the criticism he faced was politically motivated. That April, when a city audit issued a scathing assessment of HART’s performance, Grabauskas said its release had been rushed under pressure from the City Council’s chairman, Ernie Martin.

Martin, who was considering a run for mayor, had recently called on Grabauskas to resign.

In his email this week, Grabauskas wrote “there are those who believe my departure was a political decision.”

He added: “But I cannot judge the private motivations of others.”

‘There Was Something Fundamentally Wrong’

In 2016, Grabauskas and his HART deputies blamed rail’s persistent budget problems on Honolulu’s booming construction market.

Indeed, the city had become one of the nation’s most expensive places to build, according to construction consultant firm Rider Levett Bucknall.

Yet in a private June 16 board meeting, Hanabusa “indicated that the (budget) shortfall cannot be blamed only on a construction cost increase.“

She added that “if HART could not estimate the cost better, there was something fundamentally wrong,” the minutes state.

The agency has continued to struggle with accurate budget estimates and keeping rail costs under control long after Grabauskas’ departure.

Les Kondo HART
State Auditor Les Kondo shows copies of the HART board’s closed session meetings and calls their almost full redaction “absurd.” Olelo Community Media

His eventual permanent successor, Andrew Robbins, was dismissed from HART in December after the costs ballooned yet again. In Robbins’ case, the board opted not to renew his expiring contract.

HART’s latest, rough estimates put rail’s price tag at around $11 billion, although it hasn’t released an official updated cost.

The records from 2016 show that Grabauskas had been the board’s third pick to hire as executive director. The first two picks wanted a $500,000 annual salary. Grabauskas, meanwhile, earned a base salary of $257,000 plus $42,000 in housing and transportation stipends. He was at one point the city’s highest-paid employee. “The Board knew Mr. Grabauskas did not have construction experience,” the May 12 minutes state.

The board also discussed the $42,000 independent investigation it commissioned in private into allegations by two high-ranking HART officials that Grabauskas created a hostile work environment.

The complainants’ names were redacted. One of them, whose employment record mirrors the tenure of former HART Chief Financial Officer Diane Arakaki, alleged that Grabauskas had intimidated them into withholding information from the board regarding improper drawdowns of federal rail dollars.

The investigation by local law firm Marr Jones & Wang was unable to substantiate most of the allegations. However, the allegations regarding the federal dollars were deemed beyond the scope of the investigation and outside the investigator’s knowledge.

Meanwhile, in 2018, State Auditor Les Kondo publicly clashed with the HART board members when they refused to give his office their unredacted executive session meeting minutes from the same 2016 period for his mandated exam of the project.

“In my opinion, this is absurd,” Kondo said at a board meeting as he held up the pages that HART had provided him. The pages were completely blacked out. The encounter occurred prior to the state Supreme Court’s decision in the Kealoha case, however.

Even without access to those meeting minutes, Kondo’s office would eventually determine that HART did not level with its own board about the ballooning expenses.

After Grabauskas left, Formby left his role as transportation chief and served as HART’s acting executive director for several months until the board brought in an interim director, Krishniah Murthy.

Formby then went on to work for Hanabusa as her chief of staff when she returned to Congress in 2017. He was appointed to fill a brief vacancy on the City Council, and he now works as Mayor Rick Blangiardi’s managing director.

Hanabusa ran unsuccessful campaigns for governor and Honolulu mayor in recent years.

“In the end, the HART board and I came to the conclusion that it was in the best interest of the project for change, and we parted professionally and amicably,” Grabauskas wrote in his email Friday. “I continue to wish everyone well.”

Read the HART board’s executive session meeting minutes from April to August 2016 here:

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