HART says it’s closing the rail project budget gap

HART presents new budget outlook for embattled rail project
Published: Nov. 17, 2021 at 9:09 PM HST
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HONOLULU (HawaiiNewsNow) - Managers of Honolulu’s rail project said the budget deficit has been cut nearly in half, from $3.5 billion to $1.96 billion.

The new estimate comes as the Honolulu City Council’s budget committee approved giving part of the city’s share of the transient accommodations tax to the embattled project.

The new shortfall estimate comes from an independent analysis that was needed to sort out federal funding issues.

Some council members remain skeptical, but interim HART CEO Lori Kahikina is remaining positive.

“Now, instead of that $3.5 billion gap, we’re at $1.96 billion. And that will fulfill all of our obligations under the full funding agreement with the FTA to take us all the way to Ala Moana,” she said.

She said the project saved money by cutting positions and streamlining its operations.

The rail authority also adjusted the route on Dillingham Boulevard, to go down the mauka side of the road instead of down the middle. That means underground lines don’t have to be relocated.

Hawaii’s senior U.S. senator said the project won’t be able ot use money from the new federal infrastructure bill signed this week. However, it won’t need it, especially since the shortfall is smaller than expected.

“We really didn’t think it was three to three and a half billion, and I’m glad they’re getting better fidelity on that number,” said Sen. Brian Schatz. “I’m also glad that the city council is moving forward with the transient accommodations tax, which we think can close the entire gap.”

The new transient accommodations tax, or TAT, was approved by the council’s budget panel Wednesday. It’s a 3% surcharge on Oahu’s hotel rooms. The rail project will get one percent for the first two years, totaling about $50 million.

After that, it will get 1.5%, or about $38 million annually, with no end date.

Some council members remain wary.

“The general public and this council have heard, as you know, different numbers that change from time to time and no reason why,” Councilmember Heidi Tsuneyoshi told Kahikina during the committee hearing.

“The people are beginning to wonder whether we know what we’re talking about, because we’ve said that we have a huge shortfall and we’re now saying that it may really not be as large as that,” said HART board chair Colleen Hanabusa in acknowledging that some will doubt the new numbers.

Kahikina is confident that the current deficit estimate will hold.

“HART has a terrible reputation of every time you turn around, the number goes higher and higher and higher,” she said. “I didn’t want to do that. I said just come out one time, what is the number?”

The full council still needs to give final approval to the TAT allocation.

The estimated cost of the rail project is $11.4 billion. Opening of the full line is still about a decade away.

CORRECTION: An earlier version of the story had a higher figure for the total cost of the project. HART provided an update number on Thursday.

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