The Honolulu rail authority board presented a package of proposals Wednesday it hopes will help whittle down the city rail project’s enormous budget shortfall based on the work of a subcommittee that identified hundreds of millions of dollars in potential cost savings or new revenue for the project.

The Honolulu Authority for Rapid Transportation announced in March the 21-mile rail line faced a funding gap of about $3.5 billion, but HART Interim Director Lori Kahikina told the Honolulu City Council last week the budget shortfall is actually slightly less than $2 billion.

HART based that newer shortfall estimate mostly on a draft report by consultant Triunity Management and Engineering Inc. City officials say Triunity concluded HART can cut its consulting and other costs by $749 million, but HART thus far has refused to make that draft document public.

Kahikina also cited a faster-than-expected rebound in tax collections for rail. The city now expects to collect $539 million more between now and 2030 in excise and hotel room taxes than HART had anticipated in March. That tax revenue is already earmarked for the rail project.

HART rail cars at the Rail Operations Center (ROC) located in Waipahu next to the Leeward Community College.
Rail cars at the Rail Operations Center located in Waipahu next to the Leeward Community College. The rail authority board believes the cost of the project can be reduced by hundreds of millions of dollars. Cory Lum/Civil Beat/2021

Kahikina’s calculations also assume the city will save about $150 million with what has been called the “Mauka Shift,” which involves slightly realigning the elevated rail guideway just east of the Kapalama Canal. That would allow HART to avoid relocating major high-voltage power lines in the center of Dillingham Boulevard.

On Wednesday, the HART board presented its own assessment of where money can be saved or more cash can be raised to continue construction of the rail line. The board’s estimates would be in addition to the cost savings and extra tax collections envisioned by Kahikina in her council presentation last week.

For starters, the report by a panel of five HART board members endorsed the idea of earmarking one-third to half of the revenue from a proposed new 3% hotel room tax for rail, a step they estimated would raise an extra $440 million for rail between next year and fiscal year 2031.

The HART panel also pointed out that if consultant Triunity is correct that HART can save hundreds of millions of dollars in construction costs, that should in turn allow the rail authority to save on its overall borrowing costs for the project.

The panel’s report posed the question: “Can we now calculate those (financing) savings to be at least $240 million over the life of the project?”

HART Board nominee Colleen Hanabusa.
HART Board Chairwoman Colleen Hanabusa Cory Lum/Civil Beat/2021

The report by the board’s “permitted interaction group” also speculated that if all goes well, the rail project may not need to spend about $222 million in “contingency” money that is budgeted for unanticipated expenses such as delay costs or change orders.

HART Board Chairwoman Colleen Hanabusa said in an interview that even if the council gives HART a hefty share of the proposed new 3% hotel room tax, “it still wouldn’t be enough money, because we’re beginning with the $3.5 billion shortfall, but we think it gets us close.”

“It sounds like we’re playing with numbers. We’re not playing with numbers, we’re trying to make sense of the numbers,” she said.

Construction of the rail line from East Kapolei to Ala Moana Center is now expected to cost a total of $11.4 billion. That is more than double what it was projected to cost in 2012 before major work got underway.

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