Rail project costs projected to increase $500 to $750 million

Rail project costs projected to increase $500 to $750 million
Published: Dec. 18, 2014 at 7:59 PM HST|Updated: Dec. 18, 2014 at 10:14 PM HST
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HONOLULU (HawaiiNewsNow) - It wasn't exactly the news rail supporters wanted right before the holidays, but after crunching all the numbers the cost for rail could come in $500 to $750 million more than expected.

"If these various indicators continue in the trend that they are in, then the total project cost could be 10 to 15 percent higher unless we take certain actions," said Dan Grabauskas, Honolulu Authority for Rapid Transportation (Hart) CEO.

The rail's money problems come from various areas. First the money generated from the half a percent General Excise Tax is $41 million below projections.  Second Hart has paid $190 million in delay costs already.  Third, contracts are coming in over what was budgeted.

"Using realistic scenarios, the cost for all stations construction and the remaining guideway will exceed contingency available by several hundreds of millions of dollars," which was written in the summary overview presented to the Hart Board.

"The simplest way I can put it is in some cases they can demonstrate a hammer would have cost them $5 three years ago, but if next year they buy a hammer and show the best prices is $6," said Grabauskas.

"Is this just the beginning?" asked Don Horner, Hart Board Member, during the meeting to Grabauskas.

That is a good question. Hart will try to plug the budget gaps in various ways, including asking taxpayers to pay more.  Hart will ask lawmakers to extend the half percent general excise tax beyond its original sunset date of December 2022.

"We're just trying to manage with what we have today. To the degree of some of the legacy issues in the past were things that the project may not have done right. Either issuing contracts prematurely or not doing things correct and opening themselves up for lawsuits. We're not going to do that. Our job today is to make sure we act appropriately, correctly and not repeat the mistakes of the past," said Grabauskas.

Dan Graduals said all options are on the table.  But Honolulu Mayor Kirk Caldwell said all but one.  He will not use money from the 5307 fund, that's $210 million dedicated to The Bus and Handivan.

"I want to make it absolutely clear as Mayor. None of that 5307 bus money will be used for rail. It is about bus and rail together. Not bus vs. rail. Taking away that money would pit bus against rail," said Caldwell.

Right now the bigger issue is rail versus the half a billion dollar cost overruns.

The next year is critical.  The rest of Hart's construction contracts will go out and be awarded in 2015.  That will be another indicator whether this is just the beginning of the cost overruns. 

The project isn't expected to be finished until 2019. The cost before today's projection was $5.26 billion.

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