An agreement would immediately clear the way for $125 million in federal funding.

The Federal Transit Administration has set a target of the end of this year to finalize a new grant agreement with the city that will allow the federal government to finally open wide the spigot of federal funding for the Honolulu rail project.

Lori Kahikina, executive director of the Honolulu Authority for Rapid Transportation, said Friday the FTA wants to sign a new Full Funding Grant Agreement with the city in late December. That would immediately clear the way for $125 million in federal funding.

That would be a major milestone for the Honolulu project because the FTA has withheld $744 million in federal funds since 2014 as the city struggled to resolve cost overruns and a long series of construction delays.

new construction Skyline Train commuter Mokauea Kalihi transit station public rail
The Federal Transit Administration aims to sign a new agreement with the city by Dec. 31 that would reopen the spigot of federal funding for rail. (Kevin Fujii/Civil Beat/2023)

The city and FTA first signed a similar Full Funding Grant Agreement in 2012 that called for the federal government to contribute $1.55 billion to help fund construction of the rail line, but city plans have changed dramatically since then.

Construction of the 20-mile elevated rail line from East Kapolei to Ala Moana Center was originally expected to cost $5.1 billion, and was supposed to be open for business by 2020.

But construction was delayed and costs escalated wildly since then, forcing the Legislature to step in twice to provide financial bailouts for the project.

The city finally took the dramatic step of shortening the rail line by a mile and canceling plans for two stations and a 1,600-stall parking garage at Pearl Highlands. Even with those cost-cutting steps, HART estimates the system will cost $9.93 billion including finance charges.

Those changes to the rail project triggered additional environmental reviews and other federal scrutiny, and required a new grant agreement with the federal government.

HART had hoped to complete that grant agreement and begin drawing additional federal funding last December, but that process has taken a year longer than expected.

The HART board has not yet seen the proposed full funding grant agreement, which is still pending with the FTA.

Kahikina said the draft document can be made available to a HART permitted interaction group — essentially a subcommittee of the HART board — once it has been sent to U.S. Secretary of Transportation Pete Buttigieg for his consideration next month.

That HART subcommittee would then be able to review the document privately sometime after Nov. 3 under a schedule provided by Kahikina to the board, but the document would still be considered confidential at that point, she said.

The schedule calls for the HART board to give “conditional approval” to the agreement by Nov. 30, and also indicates the Congress would be given official notification of the agreement the same day. “At that point, it’s public,” Kahikina told the HART board on Friday.

It is unclear from the schedule Kahikina provided whether the draft agreement would be made public before the HART board votes on it. However, HART Board Chairwoman Colleen Hanabusa said in an email Friday the public will see the document earlier if it is transmitted earlier to Congress before Nov. 30.

The document would then be submitted to the Honolulu City Council for its approval, and Kahikina said Honolulu City Council Chairman Tommy Waters is willing to waive any committee hearings to allow the full council to immediately consider and vote on the draft agreement on Dec. 6.

The schedule presented by Kahikina calls for council to approve the document by Dec. 23. and the FTA to then execute the agreement by Dec. 29.

FTA has said it will release $125 million in federal funding once the new full funding grant agreement is finalized, and will provide an additional $250 million after HART awards a contract for construction of the rail line and stations in the city center from Middle Street of the end of the line near South Street.

Completion of the shortened rail line is now scheduled for spring of 2031. The first 11 miles of the rail system opened on June 30, but ridership on the half-built system has been limited.

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