With new public-private partnerships, rail CEO promises hundreds of millions of dollars in savings

The pledge comes after days of political bickering over a stern warning from the feds.

With new public-private partnerships, rail CEO promises hundreds of millions of dollars in savings
CEO says rail will be built cheaper with public-private partnership (Hawaii News Now)

HONOLULU (HawaiiNewsNow) - After two days of political bickering over a letter from the federal government that seemed to threaten sanctions against Honolulu’s rail transit project, rail CEO Andrew Robbins offered a message of reassurance Wednesday.

Robbins said he met with top officials of the Federal Transit Administration in Nashville late last week, and said Honolulu Authority for Rapid Transportation would easily meet the deadlines laid out in the FTA letter.

The 60-day deadline for a financial and recovery plan ― to respond to rising costs and limited tax revenue ― caused the most headache this week.

On Tuesday, in response to the FTA demands, Mayor Kirk Caldwell called for urgent action by the Honolulu Authority for Rapid Transportation and the City Council while Council Chairman Ernie Martin told the mayor not to panic.

Robbins was far from panicked Wednesday as he laid out a plan to use a new contracting system, a public-private partnership, which he predicted would save the project well over $300 million over the next 30 years.

The decision about the contract process was among the urgent demands of the FTA.

Under Robbin’s plan, HART and the city would seek multi-national partnerships to bid on a long-term contract to design, build and operate the entire system for the three-decade life of the train system.

He said that system is becoming very popular for government infrastructure projects worldwide, and would attract more competition in Honolulu.

He said he estimates the private companies would operate the system for the city at about $10 million a year less than the current estimates ― of about $100-$120 million annually.

He said he expects the costs of building the last four miles of guideway, stations and track as well as a park-and-ride facility in Pearl City, would be about $40 million less than what’s now in the budget.

Asked why he was so confident, he said the bidders compete to offer a price lower than the existing budget.

“Its very common that you do indicate what your affordability limit is and bidders tend to come in very competitive and below the affordability limit,” Robbins said. He cited a recent public-private partnership bid at Los Angeles International Airport that beat budget expectations.

Robbins said the HART board will receive and vote Friday morning to go ahead with the process.

He said potential joint-venture companies seem to be ready to compete, and the new level of competition and innovation could also decrease costs.

“The interest that we are getting is tremendous in terms of attracting major international developers and contractors who ordinarily would not be interested in a construction project in Honolulu,” Robbins said.

The idea is complicated here, however, because 75 percent of the system has already been bid and is under construction and the contract to build and operate the trains has already been awarded to an international company called Ansaldo.

But Robbins said consultants and his staff have concluded it can be done.

He said he also has buy-in from the mayor, who had urged caution about the new process, and from Ansaldo, which would be part of any winning joint venture because of its vested interest in the project.

Robbins said if the HART board approves, the solicitation for bidders could go out Friday.

Robbins also told reporters that he is certain that the issue over how the city will put forward $44 million expected in the new financial plan will be worked out by the mayor and council. He also said he will comply with FTA’s request that he add $134 million more to the project budget, but added that he doesn’t think it will need the money.

The Oahu rail project is the state's largest public works project. (Image: Hawaii News Now)
The Oahu rail project is the state's largest public works project. (Image: Hawaii News Now)

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