Hundreds of contractors and consultants working on Honolulu’s $6 billion rail project are raking in tens of millions of dollars in taxpayer funds, yet there’s little accounting of what they’re actually doing for the money.
It’s a glaring oversight that state lawmakers and city council members are struggling to reconcile before approving an extension of a half-percent General Excise Tax surcharge that could last anywhere from five to 25 years depending on what shakes out at the Capitol.
But even with calls for more transparency, the Honolulu Authority for Rapid Transportation has been reluctant to release information about how much these companies, which have been hired as subcontractors, are being paid.
Subcontractors are companies or individuals who have separate contracts or other agreements with prime contractors to provide specific services or materials.
For example, Glad’s Landscaping of Honolulu has a subcontract to perform tree work for Kiewit Infrastructure West Co., the prime contractor building the West Oahu Farrington Highway guideway section, while Ramtek Fabrication of Kapolei has a materials agreement with Kiewit to supply precast concrete structures.
Dan Grabauskas, HART’s Executive Director and CEO says it’s not within his legal authority to know how much the project’s main – or prime — contractors are paying the subcontractors helping them complete work on the 20-mile rail line between East Kapolei and Ala Moana Center. Getting such information, he has said, would be based upon “voluntary” disclosure by
The Senate Ways and Means Committee on Tuesday voted to extend a 0.5 percent General Excise Tax surcharge for Honolulu’s rail project another five years beyond its Dec. 31, 2022, expiration.
The vote on House Bill 134 indicates that lawmakers are supportive of helping the city complete its $6 billion driverless commuter rail project despite cost overruns and questions of lax oversight.
But by limiting the extension to five years with additional caveats, the senators also showed that they don’t want to write a blank check to the city and the Honolulu Authority for Rapid Transportation without more assurances about how those taxpayer dollars are being spent.
“First and foremost, the Senate is very clear that it wants to make sure that the job that was started is completed,” said Sen. Jill Tokuda, who chairs the Ways and Means Committee. “In terms of the information that we’ve been provided we feel that this is giving HART and the city a great deal of opportunity.”
The bill will likely go to conference committee, where House and Senate members will hash out a final version. Legislation can dramatically change or even die during conference committee, which is conducted largely out of the public eye.
Another proposal related to the GET, Senate Bill 19, appears to have stalled out in the House Finance Committee as there has been no hearing scheduled for the measure, meaning HB134 is the likely
Hawaii Gov. David Ige isn’t saying whether he will approve or veto any extension of a General Excise Tax surcharge that is being earmarked for Honolulu’s $6 billion rail project.
But he does acknowledge that he’s worried an estimated $910 million shortfall in construction costs will continue to balloon. And he’s not sure taxpayers should be penalized for potential mismanagement.
At an editorial board meeting with Civil Beat editors and reporters last week, Ige noted that until very recently rail project officials had assured the public that the project was on time and within budget. But a few months ago, Honolulu Authority for Rapid Transportation officials said the project was coming up significantly short of money.
“There’s a big difference between on budget and on schedule and a $1 billion shortfall,” Ige said. “That’s a concern. An extension would essentially embrace the notion that if in fact the project was mismanaged from a financial perspective, that we are authorizing or condoning that activity.”
Although Ige supports rail, he’s skeptical about extending the 0.5 percent GET surcharge this legislative session. The Legislature is considering two proposals that would keep the tax going beyond its Dec. 31, 2022 sunset date to pay for the growing deficit.
Some lawmakers have expressed similar concerns over extending the GET surcharge and Sen. Jill Tokuda, who chairs the Senate Ways and Means Committee,
Honolulu Mayor Kirk Caldwell and his top transit official took their licks from a decidedly anti-rail crowd during a boisterous town hall meeting at Washington Middle School on Wednesday.
While much of the frustration stemmed from the city’s desire to extend a half-percent surcharge on the General Excise Tax to pay for a nearly $1 billion project shortfall, many critics rehashed old concerns, including worry that rail is a financial boondoggle and won’t ease Honolulu’s worsening traffic congestion.
But there was also a very real sense of mistrust among attendees, with several challenging the assertions made by the mayor and Honolulu Authority for Rapid Transportation Executive Director and CEO Dan Grabauskas.
In fact, one man who was videotaping the event on a cell phone stood up after the first written question from the audience was read aloud to Caldwell and Grabauskas. He doubted its authenticity.
“This ain’t a town hall meeting,” H. Doug Matsuoka said to a crowd of more than 100 people. “This is a public relations event.”
Only one man spoke out in favor of the project during the two-hour meeting, saying he didn’t understand all the “bellyaching.” He also wanted to know if more money could be spent to speed up construction and open the rail line sooner.
RelatedGot a $700M Shortfall? Set the Cycle to ‘Spin’Dec 30At Least $1.25B Has Been Spent
A community town hall meeting to discuss the rail project is scheduled for Monday, March 30, at 5:30 p.m. at Washington Middle School 1633 S King St.
Honolulu Mayor Kirk Caldwell and Honolulu Authority for RapidTransit (HART) officials are expected to be in attendance.
The meeting is being held by state Sens. Brickwood Galuteria and Les Ihara, state Reps. Scott Saiki, Della Au Belatti and Scott Nishimoto; and Honolulu Council member Ann Kobayashi.
Should be some fireworks generated at the meeting, no?
The rail project has been in the news a lot lately, especially regarding efforts to extend Oahu’s general excise tax to help pay for the $6 billion project.
I should clarify: $6 billion and growing.
Read Civil Beat’s related editorial, Honolulu Rail: Big Questions Demand a Legislative Special Session.
Ever been accosted by a pushy salesman demanding, “What would it take to get you into this car today?”
That image comes uncomfortably to mind too often these days in the dialogue concerning the troubled, $6 billion (and counting) Honolulu rail project.
In recent weeks and months, we’ve been treated to news of surprise cost overruns and revenue shortfalls totaling nearly $1 billion, troubling assertions by the agency managing the project that it’s not responsible for tracking costs of its hundreds of subcontractors and urgent calls from Honolulu Mayor Kirk Caldwell for the Legislature to pass an extension of the tax providing the lion’s share of project funding. Delaying the extension, we are warned, will only make things more expensive and moving ahead on the project more difficult.
Time is running out! Act now to lock in at today’s rates!
Requests from Caldwell and Honolulu Authority for Rapid Transportation Executive Director Dan Grabauskas to extend the General Excise Tax surcharge have earned widespread criticism from legislators and served as a catalyst for a recent flurry of proposed resolutions — to have the state audit the project, to seek cost-cutting measures, to look into the progress of the project’s completion and more.
Legislators have also publicly wondered why the Honolulu City Council has been relatively quiet in its support for the
Editor’s Note: Civil Beat has spent the past six months examining financial records relating to the Honolulu rail project. “Off Track” is an ongoing series that explores what’s happening to the taxpayer money that is going into the biggest public works project in Hawaii history. Continue the conversation in our Facebook Group, Honolulu Rail Talk, or through Twitter or Instagram using the hashtag #railtalk.
On May 25, 2013, Honolulu rail chief Dan Grabauskas boarded a plane for Europe to check in on the Italian train manufacturer that had signed a $1.4 billion contract with the city to design, build and operate the driverless system.
AnsaldoBreda and AnsaldoSTS, which together form Ansaldo Honolulu JV, were facing a deluge of bad press for shoddy construction and broken contractual promises from Buffalo, New York, to Gothenburg, Sweden.
Ansaldo’s parent company, Finmeccanica SpA, had problems of its own. The company was bleeding money, and its CEO had been accused of offering bribes for contracts. He has since been acquitted.
Grabauskas’ trip, which included stops in Denmark and Italy, cost taxpayers $7,041, according to city budget data obtained by Civil Beat through a public records request.
But Grabauskas, who heads the Honolulu Authority for Rapid Transportation that oversees construction of the city’s $6 billion rail project, is a frequent flier. His travel expenses since he was hired total almost $57,000.
RelatedMath Problem: Does Honolulu Rail GET Shortfall Really Add Up?Mar 04At Least $1.25B
Officials at the Honolulu Authority for Rapid Transportation had known for months the city’s rail project was headed for serious financial trouble but didn’t fully share that knowledge with the public until last December.
For at least two years HART’s directors received regular updates on the growing shortfall in General Excise Tax surcharge revenues. Two months ago, during an executive session, the board discussed how it planned to lobby state lawmakers to extend the tax past its scheduled expiration date in 2022.
With barely two miles of railroad guideway built, major construction contracts yet to be bid and potential cost overruns and shortfalls estimated as high as $910 million, HART says the current special tax surcharge won’t generate anywhere near enough money to pay for the city’s share of construction or the municipal subsidies needed to operate an integrated rail and bus system that have been estimated to be nearly $6 billion over the next 15 years.
Any extensions of the system, such as to the University of Hawaii at Manoa campus, will also need the higher taxes.
To underscore its argument, HART officials announced a week before Christmas that GET surcharge revenues were $41 million short of what they had expected to receive, and with additional costs blamed on lawsuits that delayed construction and missteps by the administration of former mayor Mufi Hannemann in jumping the gun on construction, those deficits could continue to increase.
Construction proposals to build three rail stations came in millions of dollars higher than expected, yet officials remain optimistic that plans to reduce costs are working.
On Tuesday, the Honolulu Authority for Rapid Transportation opened bids from five companies vying for a piece of the $6 billion railroad project. The lowest bid was $79 million from Hawaiian Dredging Construction Company, which was more than the $65 million to $75 million HART had hoped for in its own estimates.
Other proposals ranged from $85 million to $117 million. HART must now review the bids to make sure all specifications and requirements were met before officially awarding the contract to the lowest bidder. The stations are located at West Loch, Waipahu and Leeward Community College.
HART originally bid the three rail stations last year as part of a larger nine-station construction package, but stopped once the lowest-priced proposal came in about $110 million more — or about 60 percent higher — than expected.
RelatedOff the Rails: Honolulu Transit Project Up to $700M Over BudgetDec 18Honolulu Rail Deficit Could Be Closer to $1 BillionJan 22At Least $1.25B Has Been Spent on Rail So Far, But Where Has All the Money Gone?Jan 30
Much of the cost increase was blamed on the current construction boom taking place around Kakaako, where cranes have become part of the skyline. To reduce the price, HART split the nine-station package into smaller
Forget about the nearly $1 billion shortfall, Honolulu’s rail project has a cash flow problem that could halt work as soon as this summer.
Construction costs are now outpacing the money trickling in from taxes and the federal government. That means the Honolulu City Council must issue debt to temporarily cover the difference while the revenues catch up.
But council members are still uneasy about the plan, especially given the growing shortfall and the fact that state lawmakers have yet to pass an extension of the general excise tax surcharge to pay for it.
On Wednesday, the City Council Budget Committee once again tabled an agreement with the Honolulu Authority for Rapid Transportation that would allow the city to float bonds for the project.
Council members also signed off on a resolution that would take $210 million in federal funds normally used for city bus service out of the rail budget, which effectively increases the shortfall and forces officials to find more money.
RelatedAt Least $1.25B Has Been Spent on Rail So Far, But Where Has All the Money Gone?Jan 30Off the Rails: Honolulu Transit Project Up to $700M Over BudgetDec 18Large Rail Contractors Dump $1.3 Million into Local Campaign CoffersFeb 02
HART Executive Director and CEO Dan Grabauskas said these decisions add even more uncertainty to the project. The most immediate concern is cash flow.
Without bond revenues coming in, he said construction
Editor’s Note: “Off Track,” our investigative series examining what’s happening to $6 billion in taxpayer money that is going into the biggest public works project in Hawaii history, continues today with a look at campaign contributions from contractors to local politicians. That may seem like an obvious political story but our larger question remains: Is the Honolulu rail project boosting the economy — as Oahu voters were promised — or just fattening the campaign treasuries of politicians in a position to hand out lucrative contracts? We need your help to figure out who’s really benefitting from the rail project. Check out the list of companies posted at the end of this story. Who are these companies and are they really locally owned and operated? Have you or anyone you know gotten a job with any of them? Do you own or work for a business that has benefitted from rail money? Increased sales? Better salaries? What are some of the economic indicators you’ve seen that would suggest rail is having an impact on our economy? Help us tell this important story through crowdsourcing. Post your thoughts in the comments section below or send a note to Nick Grube at firstname.lastname@example.org. Continue the conversation in our Facebook Group, Honolulu Rail Talk, or through Twitter or Instagram using the hashtag #railtalk.
Many of the companies snatching up contracts as part of Honolulu’s $6 billion rail project are also the same ones plumping up the campaign coffers of local politicians.
A handful of Hawaii-based businesses alone
Editor’s Note: Civil Beat has spent the past six months examining financial records relating to the Honolulu rail project. “Off Track” is an ongoing series that explores what’s happening to the taxpayer money that is going into the biggest public works project in Hawaii history. Our investigation raises serious questions about the lack of public accountability on the project, especially at a time when city officials are asking lawmakers and City Council members to give them hundreds of millions more as the project flounders financially. Continue the conversation in our Facebook Group, Honolulu Rail Talk, or through Twitter or Instagram using the hashtag #railtalk.
City Council members aren’t the only ones worried they’re getting the runaround when it comes to following how the money is being spent on Honolulu’s $6 billion and counting commuter rail project.
State lawmakers say they too want some answers on the spending habits of the Honolulu Authority for Rapid Transportation that last month raised the specter of huge cost overruns on construction of the 20-mile rail system stretching across the southern girth of Oahu.
On the line is a proposed tax increase. Both HART officials and Honolulu Mayor Kirk Caldwell want lawmakers to make permanent a half-percent surcharge on the state’s general excise tax to help pay for the project.
HART has already begun laying the groundwork for seeking a surcharge extension and the borrowing of millions of dollars secured by the
Honolulu Mayor Kirk Caldwell’s desire to protect $210 million in federal bus funding means the city’s $6 billion rail project needs even more money than officials had recently announced.
In December, Honolulu Authority for Rapid Transportation Executive Director and CEO Dan Grabauskas said the project was estimated to go over budget by $550 million to $700 million.
And while Grabauskas knew the city didn’t want to spend the $210 million on rail, he didn’t include it in the projected shortfall. If he had, the range would be $710 million to $910 million.
KITV reported the discrepancy Tuesday, including quotes from Honolulu City Council members who raised questions about whether HART and city officials were being truthful about just how much money was needed to complete the project.
“The council was never told that we have a nine-hundred and some odd million dollar shortfall for rail,” Honolulu City Councilman Ikaika Anderson told KITV4. “The council was told by HART that our shortfall is $700 million.”
Councilwoman Ann Kobayashi, who chairs the budget committee, called the project’s financial plan a “shell game.”
Caldwell and Grabauskas responded quickly, even though both were on the mainland meeting with federal officials about the project and its financing.
“I maybe think it could have been made more clearly by HART when they talked about it,” Caldwell told KITV from Washington, D.C. on Wednesday. “At
UPDATED 9 a.m., 9/17/2014
County officials agree on at least one thing as they prepare to lobby the Legislature next year: They want more funding for local government services ranging from roads to rescues.
But Kauai, Maui, Big Island and Honolulu council members and mayors have different ideas on how to go about boosting their revenues.
Council members plan to ask state lawmakers for a bigger share of hotel taxes. The mayors, although not opposed to more Transient Accommodations Tax money, may double down on new revenue proposals with a request for the authority to levy up to a 1 percent county surcharge on the General Excise Tax.
The counties’ success in getting either through the Legislature next session, which starts in January, could make a difference in the number of lifeguards at beaches or the amount of potholes that get filled. It could also determine whether the counties have to increase property taxes — the only tax they have direct control over — or raise other fees to maintain their current slate of services.
In the case of Honolulu, Mayor Kirk Caldwell wants to keep the county’s 0.5 percent GET surcharge that it’s using to fund the 20-mile-long rail project. The surcharge, which voters approved, is set to expire in 2022 but Caldwell says Honolulu would like to