Cost of buying rail route properties jumps to $222 million - Hawaii News Now - KGMB and KHNL

Cost of buying rail route properties jumps to $222 million

Honolulu City Councilman Tom Berg Honolulu City Councilman Tom Berg
PEARL CITY, OAHU (HawaiiNewsNow) -

The city continues to buy property in the line of the rail transit project, some for much higher than the homes are valued by the city.

In 2006, the city estimated it would pay about $70 million to buy about 215 full and partial properties along the rail route. Today, that cost has jumped to $222 million, and you might be surprised to see the properties that the city has paid more than a million dollars for.

"Thank you chair, keep it secret. Mahalo chair, for just acknowledging you want to keep it secret. Mahalo," said Honolulu City Councilman Tom Berg, during a Budget Committee meeting July 26.

Before Councilman Berg made that outburst, he was trying to make a valid point.  Why is the city paying so much for properties in the way of rail?  Take houses in the Banana Patch area of Pearl City, for example.  A house at 96-137 Kamehameha Highway was built in 1950 has seen better days, but it is on almost an acre of land. The city values it at $392,000. Zillow says it's worth $600,000. HART paid the owners more than a million dollars.

Another property at 96-149 Kamehameha Highway is valued at $477,000. The city bought for $558,000.  The small home is falling apart and appears to be in disrepair.

The property, this one at 96-157 Kamehameha Highway, includes 3.5 acres in the Banana Patch.  It is valued at $456,000 according to the city. It was bought for more than $1.2 million.

"How do you get those inflated numbers that Hart is now coming across?  Because it is three times over the value," said Councilman Berg.

In 2006 the city projected spending a total of $70 million acquiring properties. Steve Sofos, a leading realtor in Hawaii, says it's typical government to low ball early to make a project look good. He calls the city negligent, in part because they knew the numbers would be higher.

"They obviously underestimated the number to begin with to make the rail look good. The overall real estate market has not changed that drastically. It's been a relatively flat market the last 5 years," said Sofos. "They figure the public will accept it. There is no way they should have the projected numbers that low."

"They more than low balled. It was a bait and switch," said Berg.

"The current estimate for property acquisition and relocation costs is $222.19 million, as listed in the latest financial plan," said Scott Ishikawa, HART spokesperson.  "As for the $75 million rough estimate on property acquisition costs, that figure came before any planning study for the rail project was completed. The figure is based on 2006 dollars, not year of expenditure dollars which adjusts for inflation."

As for the prices to buy the homes Hart says it paid fair market value set by independent local appraisal companies Yamaguchi & Yamaguchi, John Childs & Company and ACM Consultants Inc.

Ishikawa adds the property appraisals were approved by the federal government.

It still doesn't add up to Councilman Berg, who says sometimes he has to make a scene in order to make a point.

"If I have to sacrifice my reputation or character to save the taxpayer money it's no loss to me.  It's on their behalf," said Berg.

To see the list of 16 properties acquired so far and how much the city paid for them, click here.

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