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The Honolulu Advertiser
Posted on: Wednesday, March 24, 2010

Honolulu rail financing will get extra scrutiny by governor

By Sean Hao
Advertiser Staff Writer

Gov. Linda Lingle set in motion yesterday the process to review the city's financial plan for constructing a $5.3 billion elevated commuter rail line, which could further delay the start of the project.

The state began the search for a consultant to conduct the analysis of the cost and revenue estimates for Honolulu's new rail system. That analysis could take up to three months and won't begin until the city releases an updated financial plan for the project.

The state's timetable, and the city's inability to meet its own deadlines for the release of the project's final environmental impact statement, means it's unlikely construction on the transit project will begin until this summer or possibly fall.

The city had planned to break ground on the 20-mile East Kapolei-to-Ala Moana line in December, however, that has been delayed indefinitely by a federal review of environmental impacts as well as concerns about the train's impact on runway safety zones at Honolulu International Airport.

The city earlier warned that a one-year delay would add $100 million to the cost of the project.

"We have an obligation to the residents of this state to perform an objective assessment of this project since Hawai'i taxpayers, not the federal government, will bear the costs," Lingle said in a news release. The city expects the federal government to contribute about $1.55 billion to the project.

"Claiming that this project will create jobs does not relieve us of our duty to make sure we can afford it over the long term," Lingle said.

Last night, Mayor Mufi Hannemann questioned why Lingle is going through with her analysis when the Federal Transit Administration is examining the project's finances.

"If she's going to go through this silly exercise, all I say to her is, 'Do it quickly, and make sure you explain to the legislators and the public how much it's going to cost and where that money is going to come from,' " he said at a rally for his potential campaign for governor.

The city needs the governor's approval of the project's final environmental impact study to go forward with the train.

Lingle has said her decision to have the city's financial plan analyzed was prompted in part by a drop in the tax revenue needed to pay the city's portion of project costs. She previously stated that her analysis would begin after the project's final environmental impact study is released. However, transportation Director Brennon Morioka yesterday said the analysis will be conducted once the project's final financial plan is submitted to the FTA.

That updated financial plan won't be part of the environmental impact study, but will be submitted in the city's application to enter the final design phase of the project. The city had expected to seek to enter final design in April, under a project timeline released last summer.

"When the governor is going to look at the final (EIS) she wants to view it in the context of how the final alternative jibes with the city's ability to pay for construction of the rail facility as well as the city's ability to maintain and operate the rail transit program looking forward into the future," Morioka said.

The state will attempt to choose a firm to analyze the rail project's financials as quickly as possible, he said. "We know that the city has some sense of urgency in getting this done and so we too want to be collaborative in the process."

Firms seeking the state contract to conduct the study must submit their qualifications by an April 6 deadline, according to the request for qualifications issued yesterday.

The work will include an analysis of the city's projected costs of building the project and operating and maintaining the rail. The firm hired also will analyze city estimates of transit tax revenue needed to fund the rail.

Advertiser Staff writer Derrick DePledge contributed to this report. Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.