BY MALIA ZIMMERMAN – There were several heated exchanges yesterday at hearing at the Honolulu City Council between Budget Chair Ann Kobayashi and other budget committee members and Honolulu Authority for Rapid Transportation’s acting interim director Toru Hamayasu and Chair Don Horner.
They were scheduled to discuss the Authority’s financial plan for FY2013, but City council members had many questions about the $5.3 billion elevated steel on steel rail system in addition to the growing budget for the Authority which oversees the rail construction and management.
Later this month, the city plans to begin constructing 50, 8-foot wide columns that are 200 feet deep in West Oahu. That is in the first 10-mile phase of the project.
Council members, who suggested putting a hold on construction, until a full Federal Funding Grant Agreement for the rail project is in place this October, and until a federal lawsuit against the project is resolved this August, were surprised to learn it is cheaper to erect rail columns along the first part of the rail route in Ewa, and have to tear them down, rather than put the first phase of the project on hold.
Hamayasu, who made this pronouncement, provided no evidence to prove this claim, or his assertion that every month of construction delays costs the city $10 million, though council members asked him to provide an accounting.
Councilmember Ikaika Anderson asked Hamayasu: “Just so I’m clear here, it would be cheaper to pay contractors to erect guideway columns and then pay them again to take them down rather than waiting until the full funding grant agreement it done?”
“That is correct,” said Hamayasu.
“How did we reach that conclusion?” asked Anderson.
“When you look at the delay claims and also inflation cost of the material and the labor of those items, it is cheaper to start constructing now,” Hamayasu said.
Anderson said city council members may issue a resolution asking HART to wait to begin construction until federal funding is finalized in October so local taxpayers are not left with the risk of paying for the entire rail bill. But HART does not have to agree to the delay.
Anderson said: “If we passed a resolution anyway would you stop your plans to go ahead with construction or would you defy our wishes?”
“We’re doing what the charter said to do. If for some reason the council and the public have changed their mind, we’ll certainly abide by the public and the change of the charter and whatever you want us to do,” said HART chairman Don Horner.
The exchange between Horner, Hamayasu and Anderson grew more intense toward the end of the hours-long hearing.
Horner told council members he did not believe it was a good idea to wait, and while the pillars are symbolic, they are about $250,000 each, considerably less than the cost of the planning and preparation to put them there.
“To basically idle 50 subcontractors, and idle several thousand people, is what you’re asking us to do? Shut down all those people coming off the bench, you want us to tell them to go back to the bench, is that what you’re asking us to do?” Horner asked.
Anderson said: “I just want to be sure it would be more economically feasible to build the columns, pay for building the columns and then pay for taking the columns down. I’m also concerned that building the columns only to have them sit there and then be taken down could possibly be a monument of embarrassment not only to this council buy to the administration and HART.”
One of the assertions by Hamayasu is there will be 4,000 to 17,000 people working on the rail project while it is under construction, with an average over the years of 10,000. That number surfaced yesterday in hearings, but Hawaii Reporter has been unable to obtain any documentation on what those jobs will be, what the jobs will entail, who will be hired and how much they will be paid. The HART communication offices was asked several months ago to provide that to Hawaii Reporter, but so far it has not. Horner said yesterday by phone it is a number that consultants arrived at, and he has no access to what the jobs are or information as to whether that many jobs will in fact be created.
HART Salaries, Staffing in Question
HART plans to grow its staff from 87 to 142 people.
The rent for their premium offices in Alii Tower in Downtown Honolulu will rise from $1.7 million to $2 million a year.
Council members asked why HART, which is a semi autonomous rail authority, has to spend so much on rent in a private office building while space in city buildings is available.
HART’s travel budget is rising from $82,000 to $104,000 a year.
And there are the five public relations people on staff, which CIty Council Member Tom Berg questioned the need for.
The costs to condemn land for the project went from $90 million to $214 million.
Kobayashi said the council is worried about the increasing costs of the project and running HART.
There will be further budget review, but HART will take the money for its operations out of the money collected for the construction and operation of the rail from the state General Excise Tax surcharge on Oahu.
The Authority, however, may need access to other capital from the city budget to gain approval from the federal government for its financial plan for the rail, which Kobayashi pointed out is “weak.”
The city already has committed $2 billion in contracts to the project. But the federal government wants assurance the city has the capital to pay for this and the rest of construction before committing to funding by this October.
Federal Approval for Rail Project Could Hinge on Access to More City Capital
HART must submit the application for the full funding grant agreement this Spring, and with it a stronger financial plan.
Hamayasu told council members yesterday that within two weeks, the city will be requesting another $100 million, or $450 million in total.
“Hypothetically what happens if the council says no?” Anderson asked.
Hamayasu said: “I think we have a problem with FFGA. I think we have a risk of not having the FFGA.”
So what if the city issues contracts and federal funding does not come through?
Horner said HART is not allowing any contracts to proceed unless it has the financial capacity to fund those contracts.
But Hamayasu said HART can cancel but the taxpayers will still be left with the bill: “If FFGA doesn’t happen we have a provision in the contract where we can terminate the contract, and of course the contractor will submit some sort of a claim, and we will wind up with some claim issues. But by right we should be able to cancel any contract.”
When Council member Tulsi Gabbard asked the cost, Hamayasu said that depends on what’s going to be claimed.
“My experience is that the claim usually matches the amount we have left,” Hamayasu said.
HART also potentially wants access to all of the city’s 5307 funds normally allocated to TheBus and Handivan for repairs and maintenance, which bothered several council members. If HART takes the $244 million for the rail, money for TheBus and Handivan would have to be found elsewhere in the city budget and could lead to an increase in fees and property taxes.
Anderson said that is an end run around a city ordinance that prevents the rail from accessing city funds.
The city council will hold another hearing with HART to further its probe into contracts and spending, Kobayashi said.