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Honolulu Rail Costs Inflate as Construction Halts, Again

Thursday, March 25, 2021

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As a result of Interim Honolulu Authority for Rapid Transportation CEO Lori Kahikina halting work on the ongoing Honolulu rail project, the cost of the project has now ballooned to over $12 billion.

“The cost has significantly increased just over the last several months,” said Kika Bukoski, a member of HART’s board of directors. “We're doing our best to determine the cause and how to control it.”

About the Project

Launched in 2012 when the City of Honolulu signed a Full Funding Grant Agreement with the Federal Transit Administration, the HART project was originally estimated to cost $5.2 billion, would stretch 20 miles and included 21 stations.

At the time, the project was slated to reach completion and be open to the public by 2020.

However, it wasn’t long until the project started experiencing issues. Just a year after the project was approved, Legislature approved a rail bailout worth $1.5 billion. In 2017, another bailout for $2.4 billion was approved.

By 2018, construction on the project continued to hit snags as transit officials repeatedly flagged Dillingham Boulevard and its nearly 2-mile-long gantlet of utility lines as a major obstacle to building rail. That same year, HART awarded a contract of up to $400 million to Nan Inc. to relocate what it estimated to be nearly 40 miles of utility line running along the last four miles of the route.

Throughout 2020, the rail only continued to experience setbacks involving incomplete designs, delayed construction, drops in tax revenue, and high bids, among others experienced during the pandemic.

In September, HART officials identified 13 “choke points” along Dillingham where they didn’t have the room needed to fit all the utilities. That number has since increased to 31, which includes the city’s sewer and water lines, among other types of utilities.

By November, the project was still nowhere near being completed. With the funding expected to lapse at the end of the year, Mayor Kirk Caldwell pleaded that the city not lose $250 million of its federal funding and went as far as to send a letter to Hawaii’s congressional delegation.

“Let us reiterate what we have said in our meetings with you over the last eight years: We are so very grateful to the FTA’s partnership … and your patience with us as we continue to surmount both the challenges of the past and those we confront today,” Caldwell’s letter read.

At the time, new city estimates of the project predicted that the rail project wouldn’t reach completion until 2033 and that it’s cost would land around $11 billion. This report clashed with HART board’s Finance Committee, however, reporting in a new construction budget that the project cost had increased to some $9.9 billion and could be completed in late 2027 or 2028.

Although, HART’s construction figure failed to include the additional $1 billion or so in financing costs, which put it even closer to the city’s report at the time.

At the end of the month, HART officials announced that an ongoing P3 procurement process for the rail project had been canceled, as bids received made the project too expensive. In its call for contractors, HART had set the project's design and construction affordability limit at $1.7 billion with a target of almost $1.6 billion, however, City Center Connection Group's bid was almost $2.8 billion, and Imua Transit Honolulu's bid was just over $2.7 billion.

For operations and maintenance, HART listed $2.6 billion with a target of approximately $2.3 billion for its affordability limit, but was again met by higher bids of $2.9 billion by C3G and almost $2.3 billion from ITH.

In closing a year full of delays and setbacks, the HART Board of Directors declined to renew the contract for HART CEO Andrew Robbins when it expired at the end of 2020. On Jan. 1, Honolulu Environmental Services Director Lori Kahikina stepped joined HART as interim executive director, replacing Robbins.

Current Issues

At the beginning of March, Kahikina announced that construction had again been halted along the Dillingham corridor as design drawings were not yet completed. Without the complete design plan, contractors would just be standing by as the city awaited permits.

In the past, the project had been experiencing issued with surrounding utilities, but now the project is considering moving the guideway to the mauka side of Dillingham Boulevard to avoid relocation. However, this change of plans relies heavily on approval from landowners like Kamehameha Schools and the University of Hawaii.

When Kahikina made the announcement, she also reported that the project was currently between $2 billion and $3 billion over budget and that expensive consultants were let go because she found redundancies and inefficiencies while reviewing project expenses.

“We’re paying layers upon layers of not just HART staff, but consultants and contractors and we need to cut that waste out,” she said. “Our operating cost is about $12 million per month. We need to tighten our belts internally to cut out any waste.”

To make matters worse, by the middle of the month, the rail project budget was reported to have a shortfall of $3 billion. According to reports, the money gap comes even as the Honolulu Authority for Rapid Transportation expects a $70 million infusion of federal COVID-19 relief funds to make up for HART’s 2020 drop in general excise and transient accommodations taxes.

To mediate the issue, the FTA extended HART’s deadline to come up with a financing plan to Dec. 31, 2021.

If that wasn’t enough, Kahikina predicted yet another possible project delay when it was discovered that some train wheels do not properly fit track crossings in some sections of the project, which could potentially delay the rail project’s interim service for another year.

Most recently, the board that oversees the project was told that costs have ballooned to over $12 billion, while shortfalls stand at a little over $3.5 billion. To keep the project afloat, City Council voted 6-3 to authorize a $26 million general obligation bond to support HART.

Despite these efforts, a completion date for the project still remains pushed to March 2031.

   

Tagged categories: Construction; Infrastructure; Mass transit; NA; North America; Ongoing projects; Program/Project Management; Project Management; Public Transit; Rail; Railcars; Transportation

Comment from Dave Polovitz, (3/25/2021, 8:35 AM)

It seems light rail has its issues in just about every state. Has any light rail project finished on time and on budget?


Comment from Mike McCloud, (3/25/2021, 9:02 AM)

Good Contractors and Unions...Ha!


Comment from Michael Halliwell, (3/25/2021, 10:58 AM)

Dave, it seems like it is few and far between....but it occasionally happens. Unfortunately, it is usually the ones that stall, blow their budgets and have all sorts of issues that we hear about (a lot), while those that do well get a 1/8 column note buried in the local paper (once).


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