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Honolulu officials expect $80M shortfall for rail project due to virus pandemic

(HNN File (custom credit) | HNN File)
Published: Apr. 17, 2020 at 4:33 AM HST
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HONOLULU (AP) — Honolulu should expect an $80 million tax revenue shortfall for the city’s $9.2 billion rail transit project because of the coronavirus outbreak, officials said.

The Honolulu Authority for Rapid Transportation could be forced to borrow money to meet the budget shortfall for the 20-mile (32-kilometer) project unless the agency obtains federal economic stimulus funds, The Honolulu Star-Advertiser reported Thursday.

The shortfall is likely to result from lost funds from a general excise tax surcharge and hotel room tax, said Ruth Lohr, the transportation authority chief financial officer.

Transportation authority CEO Andrew Robbins told the Honolulu City Council Wednesday that bids for a public-private partnership to help finance the last construction phase of the project will be delayed until July 22.

The Federal Transit Administration has withheld about $744 million in funding until a public-private partnership contract is awarded for the final segment of the East Kapolei-to-Ala Moana line.

The city and the transit authority agreed to delay awarding the multibillion-dollar contract after bidders requested more time to prepare proposals because of the economic impact of the COVID-19 virus.

For most people, the coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia and death.

The lost tax revenue places greater importance on the project receiving about $100 million of the $744 million allotment expected from the Federal Transit Administration, Lohr said.

“That is certainly going to put a strain based on the fact that we would then need to use financing in order to cover those cash flows,” Lohr said.

The rail project should qualify for federal stimulus funds because it will help the construction sector, Lohr said.

“We definitely have a challenge because by cutting the capital budget, we would actually then be stopping work in certain areas,” Lohr said, explaining the work stoppage would “result in more costs because we’re delaying a contract that is currently happening.”

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