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  • Hawaii Legislature: Not So Fast on More Taxes for Rail

    · By Nick Grube

    If there was one message state lawmakers wanted to send Wednesday to Honolulu Mayor Kirk Caldwell and others trying to build the city’s $6 billion rail system, it was this: Show us some skin.

    Committees in the House and Senate passed different measures that would severely limit how much tax revenue the city can collect for its beleaguered rail project, which is now facing a nearly $1 billion deficit.

    Neither bill would provide what city officials hoped for, which was a long-term extension of the General Excise Tax surcharge that currently funds most of the project.

    The Senate Ways and Means Committee scaled down a previous measure, which would have extended the GET for 25 years past its 2022 sunset date, to a five-year extension.

    Honolulu Mayor Kirk Caldwell at the Capitol on Wednesday. He has been fighting for months to extend a General Excise Tax surcharge to build the city’s $6 billion rail project.

    Cory Lum/Civil Beat

    The House Finance Committee was much more punitive, passing a measure that would cut the city’s 0.5 percent surcharge on the GET to 0.25 percent starting in 2017.

    On the bright side for Caldwell, GET bills did clear both committees, and ultimately a measure more to the city’s liking may emerge from the Legislature. But Wednesday’s votes demonstrated the level of discomfort lawmakers have with raising taxes to bail out the rail project.

    RelatedMath Problem: Does Honolulu Rail GET Shortfall Really Add Up?Mar 04At Least $1.25B Has Been Spent on Rail So Far, But Where Has All the Money

  • Math Problem: Does Honolulu Rail GET Shortfall Really Add Up?

    · By Bob Porterfield and Nick Grube

    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.

    Honolulu’s $6 billion and counting rail project needs more taxpayer dollars if construction is to continue.

  • Honolulu Rail Construction Proposals Millions Higher Than Expected

    · By Nick Grube

    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 employee David Ha, right, announced bid prices for construction of three rail stations around Waipahu.

    Cory Lum/Civil Beat

    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

  • Behind Closed Doors: Honolulu Rail Officials Planned Political Strategy in Executive Session

    · By Nick Grube

    Newly released records show top Honolulu rail officials were pumping state lawmakers for money before telling the public the project was over budget and facing a nearly $1 billion shortfall.

    The documents describe what transpired during a Dec. 18 closed-door meeting between the Honolulu Authority for Rapid Transportation board of directors and city attorney Gary Takeuchi.

    The discussion was part of an executive session held shortly after HART Executive Director and CEO Dan Grabauskas announced at the board meeting that rail was in financial trouble.

    At the time, HART Board Member Don Horner said he wanted to “huddle up” and have a “pretty candid discussion” about the projections.

    But Civil Beat obtained written minutes of the private meeting after challenging HART’s legal basis for secrecy to the Hawaii Office of Information Practices, which oversees the state’s Sunshine Law governing open meetings.

    Top rail officials have been working behind the scenes for months to get more tax money for rail.

    Cory Lum/Civil Beat

    Horner never cited a Sunshine Law exemption when he asked for the executive session. The agenda noted it could be to talk with attorneys about legal matters related to the project.

    But the minutes show that the board’s conversation focused almost entirely on the political maneuvering that would be necessary to extend the general excise tax surcharge for the $6 billion project beyond its 2022 sunset. There was little, if any, questioning of Takeuchi reflected in the minutes.

    RelatedGot a $700M Shortfall? Set the Cycle to ‘Spin’Dec 30At Least $1.25B Has Been Spent on

  • Schatz: Protecting Federal Money for Rail a Top Priority

    · By Nick Grube

    U.S. Sen. Brian Schatz wants Honolulu’s 20-mile commuter rail line to get built, but he says it will be up to local officials to find a way to pay for it.

    The $6 billion project has a projected shortfall of up to $910 million, and Honolulu Mayor Kirk Caldwell has been asking state lawmakers to increase taxes to bridge the gap. There’s worry that construction could come to a stop by this summer if new money isn’t found.

    Schatz, who met with Civil Beat’s editorial board Tuesday, said he has talked with Caldwell and others at length about the project’s struggles.

    While Caldwell wants the state to make permanent the half-percent general excise tax surcharge that has been funding the project since 2007, Schatz says his role is to protect the $1.5 billion in grant money the Federal Transit Administration awarded the city to build the project.

    U.S. Sen. Brian Schatz wants rail to succeed, but he says it’s up to local leaders to make that happen.

    Cory Lum/Civil Beat

    “I don’t think there’s necessarily more money where that came from in terms of the FTA, but I’m trying to work very closely with the state and county officials to try to make sure that that portion of the revenue remains secure,” Schatz said. “It’s just important to be vigilant when you’re talking about that much money coming in that’s being relied upon. But all indications continue to be positive from the FTA and U.S. (Department of Transportation).”

    He added that sequestration

  • Honolulu Rail Tax Alive, But Ige Still Has Questions

    · By Nick Grube

    A controversial measure to increase the general excise tax to pay for Honolulu’s $6 billion rail project passed its first committee hearing in the Hawaii Senate on Thursday.

    But lawmakers didn’t give the city the permanent half-percent surcharge it was seeking.

    Instead, they extended the 2022 sunset date to 2047 and tacked on several caveats, including requiring a state audit of the project’s finances that must be completed before the 2016 legislative session.

    The amended bill states that half of the 10 percent surcharge revenue the state skims from the rail portion of the GET must also be used for transit-oriented development projects.

    Rail construction is ongoing, but without an increase in taxes it could stop, rail officials say.

    Cory Lum/Civil Beat

    It was a victory for the city’s project, which has an estimated shortfall of up to $1 billion. The was vote unanimous and there weren’t many tough questions coming from committee members.

    With the extension, lawmakers hope the project could expand to the University of Hawaii at Manoa and downtown Kapolei.

    RelatedOff the Rails: Honolulu Transit Project Up to $700M Over BudgetDec 18At Least $1.25B Has Been Spent on Rail So Far, But Where Has All the Money Gone?Jan 30HART: Rail Could Run Out of Cash By This SummerFeb 11

    “We understand within these committees the importance of rail,” said Sen. Will Espero, who chairs the Public Safety Committee that was part of Thursday’s joint hearing.

    “It’s not only about mobility. But it’s really dealing with the future growth of our population

  • HART: Rail Could Run Out of Cash By This Summer

    · By Nick Grube

    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.

    Honolulu’s rail project is over budget and facing a cash flow problem that could stop work.

    Cory Lum/Civil Beat

    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

  • Large Rail Contractors Dump $1.3 Million into Local Campaign Coffers

    · By Nick Grube

    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 nick@civilbeat.com. 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

  • At Least $1.25B Has Been Spent on Rail So Far, But Where Has All the Money Gone?

    · By Nick Grube and Bob Porterfield

    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.

    Following the money on Honolulu’s $6 billion rail project proves difficult.

    PF Bentley/Civil Beat

    HART has already begun laying the groundwork for seeking a surcharge extension and the borrowing of millions of dollars secured by the

  • What Can We Do About the Rail? Nothing. Tackle Traffic Congestion!

    · By Panos Prevedouros

    Various groups are energized and urge me and each other to do something about stopping Honolulu’s rail project. The recent commotion has been brought about by (1) the large delays; the project is roughly three years behind schedule because the city did a poor job with the archaeological inventory and then deliberately delayed and obstructed the two lawsuits; (2) the revelations last December that the project is already about $900 million over budget, and (3) the City Ethics Commission’s investigation on the non-disclosure of rail project related gifts to five City Council Members, which could potentially reverse some important pro-rail votes and approvals.

    So what can be done about stopping the rail project now? Nothing, other than holding HART and the City accountable for project expenditures.

    Unfortunately this is easier said than done given that between FY 2008 and FY 2012 more than $550 million was spent and hardly any project was laid on the ground!

    Other agencies on the mainland can complete a 10-mile multi-lane freeway including all planning, design and clearances for this sum of money. But for $550 million we got TV and newspaper ads, building and office rentals, salaries, traveling expenses for planners and officials, piles of photocopying and plain and three-hole paper, laptop and desktop computers, cellphone and courier bills, and magazine subscriptions.

    And a lot more traffic congestion since 2006 when the rail project started.

    What’s the bottom line on traffic congestion on Oahu?

    Rebar frames the Honolulu rail project’s concrete pier foundations located near the H1 and

  • State Lawmakers Lambaste Mayor Over Request to Extend Rail Tax

    · By Nathan Eagle

    Hawaii lawmakers took turns hammering Honolulu Mayor Kirk Caldwell on Monday over his request to let the county continue charging a half-percent surcharge on the General Excise Tax to fund the city’s rail project.

    The 20-mile, 21-station project, budgeted at $5.2 billion, is now facing a shortfall of up to $910 million, spurring the mayor to ask the Legislature to make the surcharge permanent instead of letting it sunset as planned in 2022.

    “I’m here because I think it’s the last resort,” Caldwell told a panel of House and Senate lawmakers during a three-plus-hour briefing at the Capitol. “I wouldn’t be here otherwise.”

    Honolulu Mayor Kirk Caldwell discusses the rail project before a joint panel of state lawmakers Monday at the Capitol.

    Cory Lum/Civil Beat

    It’s not just Caldwell who wants GET taxing power in perpetuity though. The neighbor island mayors want it too.

    Together, the four mayors have put forward a bill that would give the counties the authority to levy a GET surcharge of up to 1 percent. The legislation limits Honolulu’s ability to use the tax only for a mass transit project, but places no restrictions on how the other counties could use the money.

    A few dozen people in attendance wore red and brought signs protesting the “rail tax extension,” occasionally interrupting the briefing with applause after comments from critical lawmakers.

    Kauai Mayor Bernard Carvalho Jr. and Hawaii Mayor Billy Kenoi made their pitches for more state support for

  • Honolulu Rail Deficit Could Be Closer to $1 Billion

    · By Nick Grube

    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.

    Honolulu’s rail budget could be about $1 billion short without federal bus money that city officials don’t want used on the project.

    Cory Lum/Civil Beat

    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

  • How Safe Has the Honolulu Rail Project Been?

    · By Sophie Cocke

    Honolulu rail workers once drilled through one of Hawaiian Electric Co.’s underground transmission lines, causing more than $50,000 in damage.

    A worker fell from scaffolding erected along one of the project’s 23-foot columns because the crew failed to properly secure brackets. Luckily, the worker’s “retractable” safety gear stopped his fall.

    While removing a bolt from a column platform, sparks caught an 8-foot by 8-foot section of grass on fire.

    Several workers were doused with hydraulic fluid when a hose ruptured while a crew was digging a trench.

     

    Honolulu rail construction near Kapolei.

    PF Bentley/Civil Beat

    These are just a few of about 150 mishaps that have occurred during construction of Honolulu’s $5.2 billion rail project since work began in 2007. The reports and related documents were provided to Civil Beat by the Honolulu Authority for Rapid Transportation through an open records request.

    The reports reflect the complexity of Hawaii’s largest-ever public works project and suggest the challenges to come as the rail line moves toward Oahu’s congested urban core. HART contractors have erected more than 120 columns from Kapolei to Ewa and are beginning work in Waipahu. Meanwhile, more than 300 50-ton segments have been cast to form 25 guideway spans. The project has more than 1,200 workers on the job and that number is expected to climb to 4,000 in the coming years.

    Despite the low worker injury record so far, the documents show a growing concern among HART officials about Kiewit Infrastructure West’s excavation procedures.

  • Feds: ‘Aggressive Cost Containment’ Needed for Rail Project

    · By Nick Grube

    Aggressive cost containment is necessary if Honolulu plans to stay within budget on its $5.2 billion rail project, according to a recent report from a federal contractor hired to oversee design and construction progress.

    It’s a dire assessment of the fiscal standing of the largest public works project in Hawaii’s history, and one that seems to conflict with what top rail officials have been saying about finishing the project on time and within its budget.

    And the report was issued before the Honolulu Authority for Rapid Rapid Transit learned that bids for the construction of nine rail stations came in 60 percent higher than expected, or about $110 million more than what was budgeted.

    HART officials are now rebidding that contract in three separate parts in an effort to contain costs, although it could delay opening the first leg of the rail system.

    Honolulu’s rail project faces significant cost challenges in part because of a fast-paced market and two lawsuits that delayed construction.

    PF Bentley/Civil Beat

    The July report, which was released in late August, noted the “sufficiency of the budget” would need to be re-evaluated after another major bid opening in November for a contract currently estimated at $750 million.

    If that bid is anything like the August opening, serious questions could be raised about whether there is enough money to complete the project as promised.

    A Pessimistic Viewpoint

    HART Executive Director and CEO Dan Grabauskas downplayed the federal contractor’s assessment, saying it’s meant to be a pessimistic view of where the

  • High Construction Costs Could Delay Honolulu Rail Opening

    · By Nick Grube

    The first leg of Honolulu’s $5.2 billion rail project might not open on time due to higher-than-expected construction costs.

    On Tuesday, Honolulu Authority for Rapid Transportation Executive Director and CEO Dan Grabauskas announced his agency would rebid a contract to build the first nine rail stations.

    The initial bid had come in more than $110 million more than expected, and Grabauskas’s hope is to split the contract into three, three-station segments as a way to rein in the cost.

    Honolulu’s rail project is facing increasing costs, forcing officials to reevaluate their plans.

    Doing this, however, could delay the opening of the East Kapolei to Aloha Stadium portion of the rail system from 2017 to 2018. The entire system, which runs from East Kapolei to Ala Moana Center, is still scheduled to open in 2019.

    During an afternoon press conference, Grabauskas blamed Honolulu’s “red hot” construction market for the cost increase, in addition to a shortened construction schedule due to delays caused by two lawsuits.

    Dividing the contract into three, he said, could reduce the time crunch faced by contractors and allow smaller companies to get involved with the project. HART officials have also looked for ways to reduce the cost of materials to help lower the price.

    The previous budget for building the nine stations was $184 million, which included a $34 million contingency. But the lowest bidder, Nan, Inc., submitted a proposal for $294 million.