Audit finds $6.5B rail project could face more cost overruns, has no plan for system maintenance

HONOLULU (HawaiiNewsNow) - The city's rail transit project suffers from unreliable financial plans and more cost overruns are likely, according to the final draft of a city audit reviewed by Hawaii News Now.

City officials already predict that the $6.5 billion dollar rail project could run an additional $300 to $800 million over budget.

Sources said the audit, which has not publicly released because it's in draft form, found:

• Honolulu Authority for Rapid Transportation's financial plans are not reliable;
• Project costs lack supporting documentation;
• Additional overruns and shortfalls are likely;
• And there is no plan for operations and maintenance costs.

"The audit is correct," said Council Budget Chairwoman Ann Kobayashi, a longtime rail critic. "We do need a change in leadership because we haven't been given all the answers. Even fellow board members, I believe, have not been given all the answers."

A city rail transit spokesman said his office will dispute many of the audit's major findings.

Transit officials have said the project's financial plan, submitted to the federal government in 2012, is being updated based on the latest information. They said they worry that the rising cost of construction in a strong economy might push costs up further on two major parts of the project where contracts still must be awarded.

Sources said the auditor looked at hundreds of files and nearly all of them were in perfect order.

Only a few were not fully documented, a source said.

The audit accused the project of using unsubstantiated cost assumptions and said project managers are not managing actual costs against their budgets.

The audit also said subsidies are going to be needed to fund operation costs of the rail project, a source said.  The city's bus system also relies on subsidies now.

The city is expected to release the audit April 15.

On Thursday, Council Chair Ernie Martin called for the resignations of HART board Chairman Don Horner, a volunteer, and rail Executive Director Dan Grabauskas, who's paid $257,000 a year.

"Nobody's arguing whether the project is a necessity or not. It's a matter of whether we're doing it in a responsible manner," said Martin, who is considering running against Honolulu Mayor Kirk Caldwell in the upcoming election.

Reached by phone Friday, Horner said that "these are very important matters for the board to consider and a thorough and open discussion will be conducted at the upcoming April 21 meeting."

Through a spokesman, Grabauskas declined comment. Horner's term as HART board chair expires in a little more than two months, at the end of June.

Horner said the board will be discussing Grabauskas' annual evaluation at its next meeting.

Grabauskas has two years remaining on a three-year contract that pays him a year of severance if he's fired.

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