Rail officials: Tax extension may not be enough to cover project's rising costs

HONOLULU (HawaiiNewsNow) - Just three months after the Honolulu City Council approved a five-year extension of the general excise tax, top rail transit officials acknowledged that extra money may not be enough to pay for Honolulu's rail project.

Completion of Oahu's rail project is already two years behind schedule and the cost has risen to roughly $6.5 billion -- an increase of more than a billion dollars.

On Tuesday, during a budget hearing, City Council members grilled rail officials about whether they can cut costs.

Rail officials said the extra $1.5 billion expected to be generated by extending the half-percent excise tax hike by five more years might not be enough to cover the rising costs of building the 20-mile project.

"I sit here today and cannot give you certainty of what those bids are if the $1.6 billion is enough to cover 100 percent of those costs. I cannot give you certainty on that," said Don Horner, who chairs the Honolulu Authority for Rapid Transportation board chair.

Horner told council members the city is heading into the most difficult and complicated 10 miles of the rail line in urban Honolulu.

He's worried about the price tag of the remaining rail stations that have to go out to bid in an economy where construction costs have risen more than 10 percent.

"It isn't the change orders. It isn't the fact that we are spending on administrative costs or consultant costs, etc. The real concern if you're the HART board is not what we've bid already, it's what we're anticipating," Horner said.

Council Budget Chairwoman Ann Kobayashi, a longtime critic of rail, said residents are getting tired of hearing about the rising costs for the rail project.

"It gets very frustrating year after year of hearing these changes and it's the public that's suffering," she said. "They're the ones paying."

Councilman Trevor Ozawa wants rail officials to save some of the $2.3 million a year they're paying to rent three and a half floors of the Alii Place office building downtown for rail offices by cutting back on space.

"And so I feel like I'm getting played here. So that's why I'm frustrated. And that's why I feel like you should be making cuts and sacrificing," Ozawa told rail transit officials.

Dan Grabauskas, HART's executive director, said his staff would look into reducing the amount of rental space but, "The first thing is we'd have to potentially break a lease, which would be costly, and we'd also have to reconfigure space to fit more people in and that would also have a cost."

Leases for the space run until 2017 and 2020, Grabauskas said. He said the offices are 88 percent occupied, with nearly a dozen vacant positions for which HART is recruiting.

Grabauskas said the city has saved about $1.6 million in recent years by housing consultants in its Alii Place office space instead of paying for them to rent elsewhere.

Council members also want to cut the number of project managers, engineers and safety staff to save money.

But Grabauskas said that's a bad idea when more and more stations are being built along the rail line.

"Some of the proposals to reduce safety staff or engineering or project management staff. I really hope the City Council will revisit that because we really need our project managers and engineers more than ever and we really need our safety staff," Grabauskas said.

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