Rail annual operating costs pegged at $100M

Rail annual operating costs pegged at $100M
Published: Jun. 6, 2016 at 2:05 AM HST|Updated: Jun. 6, 2016 at 9:15 AM HST
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Ann Kobayashi (Image: Hawaii News Now)
Ann Kobayashi (Image: Hawaii News Now)

HONOLULU (HawaiiNewsNow) - The cost to build the rail transit system has already increased from $5.3 billion to $8 billion. But the project will cost city taxpayers another $100 million a year once it's finally operating.

The Honolulu City Auditor and several Council members have slammed the rail authority for not developing a plan to pay for rail's operating and maintenance costs.

"One hundred million dollars is 5 percent of our entire operating budget every year so ... who is going to pay for it?" said City Councilmember Trevor Ozawa.  "We have to commit so much for sewage projects. We have a huge budget for police, fire and ambulances."

State and city lawmakers have already authorized a five-year extension on the 0.5 percent general excise tax surcharge to pay for construction cost overruns. But Mayor Kirk Caldwell and City Council members have vowed not to increase property taxes to pay for rail's operating costs.

"As long as I'm here, I won't allow them to raise property taxes for rail," said City Council Budget Committee Chair Ann Kobayashi.

In April, City Auditor Edwin Young slammed rail authorities for not developing a plan for future operating and maintenance costs.  The audit said such a plan would need to find ways to "maximize fare box recoveries, minimize city subsidies and address ... alternative revenues."   About 30 percent of the rail's operating and maintenance costs will be covered by fares. The remaining 70 percent is subsidized the city.

Electrical costs represent the biggest chunk of those costs and are fixed. Salaries for about 300 rail authority employees represent another large segment.

"We'll look at every way to squeeze or reduce costs," said HART CEO Dan Grabauskas. Grabauskas said HART is also working for ways to increase its non-fare revenues.  One idea calls for HART to co-develop areas next to its Pearl Highlands stations and other stops. He said his staff recently received six proposals from private developers for the Pearl Highlands station.

"There's certainly going to be some opportunity for advertising on board the the train. Maybe we can do concessions around the stations," he added.

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