July 19, 2010.
More grim news about rail transit cost overruns:
City Transportation Director Yoshioka keeps telling us that there have been major changes at FTA in the last few years and transit projects are now coming in on time and on budget.
We hate to keep bursting his bubble but that has not been the case, and two more have just come to light. In a June 18, 2010, letter to Christopher Dodd, the U.S. House Banking Chairman, FTA Administrator Peter Rogoff lays out his latest problems with two New York City projects.
- the news regarding the cost overruns and schedule delays is grim. As displayed in the enclosed table, FTA now estimates that the East Side Access project is likely to cost $1.769 billion more than was initially anticipated and will be delivered some 52 months later than the dates cited in the FFGA [Full Funding Grant Agreement] that was signed by my predecessor in December 2006. For the Second Avenue Subway project, FTA estimates that the project will cost some $930 million more than anticipated and be delivered 44 months later than the dates cited in the FFGA that was signed by my predecessor in November 2007.”
What Honolulu taxpayers should note is that the projected cost of the rail project has steadily increased from $2.6 billion in 2004 to $5.5 billion today with little or no change in the scope of the project. We can normally expect that the projected cost will continue to increase as we get closer to an FFGA.
Second, these cost overruns in the letter are relative to the FFGA and we are about 18 to 24 months away from being granted an FFGA.
Despite Transportation Director Yoshioka’s assertions that FTA projects are now under strict controls, they are decidedly not as evidenced by these and other projects we have brought to your attention during the past year.
Further, in the same letter, Administrator Rogoff writes to Dodd, “Most importantly, I want to assure you that not a single penny of additional Federal Section 5309 New Starts dollars will be used to fund these delays and cost overruns.”
In other words, city taxpayers are on their own for the cost overruns.
July 18, 2010.
City having difficulty with their admission of congestion being worse with rail:
For years we have been trying to get the City to admit what their data clearly shows, that traffic congestion with rail will be worse than it is today. The have studiously avoided it and Director Yoshioka at last Wednesday’s Council hearing on the Final EIS did not seem to want to admit that his admission (see our June 21 entry below) even existed.
The reason they do not want to admit it is that the great majority of folks living in the Ewa plain have been led to believe by the City that rail transit will relieve traffic congestion, which will be less in the future than it is today. We believe this is the major underpinning of the support for rail.
We have prepared a two-page brief on this issue, which explains more how the City misleads the voters on future congestion.
July 17, 2010.
City overreaching in its population forecasts:
Charles Carole of the League of Women Voters alerted us to the fact that the City was using outdated population forecasts in the Final EIS. As you will all realize, the about 11,000 pages of Final EIS, its appendices and Technical Reports cannot all be assimilated at once; it takes time.
So we dug into the issue and we find that the City is using, “Land use, population, and employment assumptions for the year 2030 were kept consistent for all alternatives. The data were provided by the City and County of Honolulu Department of Planning and Permitting (DPP) and are consistent with the ORTP (Oahu Regional Transportation Plan) forecast assumptions.” This is in the Final EIS p. 2-16.
However, you cannot go to the Final EIS or the ORTP to check on population data because it isn’t there. They slice and dice it and talk about segments of the Oahu population but never the total. But we dug deeper into the matter and found the City forecast in an obscure City technical report titled Travel Forecasting Results and Uncertainties. Table 2-5 shows that the City is forecasting Oahu’s population in 2030 as 1,117,322, a 22 percent increase over 2005. However, the State has been lowering its forecasts (see Appendix Tables in Excel, Table A-4) in the light of experience and since mid-2009 has been forecasting a population of 1,017,565 for 2030, about 100,000 less than the City forecast.
Just as interesting are the forecast growth rates by age group on the same table. The only age group that shows any growth rate at all are those over 65. The others are flat to negative.
Are we building a commuter rail line for the only age group that does not commute?
Star Advertiser: “Rail tax collections reach record high – full steam ahead”:
In today’s Advertiser reporter Sean Hao tells a different story in the body copy from the one the headline tells. He wrote:
“Despite the strong showing in June, rail tax collections in the first three months of the fiscal year trailed year-ago figures as well as current-year projections. From April through June, the half-percentage-point general excise tax surcharge raised $36.6 million, or an average of $12.2 million a month, based on figures provided by the state Department of Taxation. During the same period a year ago, the tax raised $41.1 million, or an average of $13.7 million a month.”
Obviously, the June collections are an anomaly, perhaps to do with recent changes concerning when GE Tax collections by businesses have to be reported – we’ll see.
In any case, GE tax collections this fiscal year, including June, are running well behind the City’s projections. A more appropriate headline might have been, “Tax collections sinking City’s rail hopes.”
More appalling misstatements from the City:
One would think that a candidate for Mayor would be a little circumspect about what he says in public in case he gets called on it. However, that does not seem to bother the acting Mayor to be, Kirk Caldwell, who was on Hawaii Public Radio’s Town Square program with City Transportation Director Wayne Yoshioka the day before yesterday holding forth on the virtues of rail. Click here for the podcast.
Caldwell kept emphasizing that the federal government has “committed $1.55 billion” to the project. However, what the FTA wrote to the City in their October 16, 2009, letter was:
“The City is seeking $1,550 million in Section 5309 New Starts funds – FTA’s approval of PE [entry into Preliminary Engineering] is not a commitment to approve or fund any final design or construction activities. Such decisions must await the outcome of PE, including completion of the environmental process.”
The FTA never “commits” to funding until the Full Funding Grant Agreement, which is at least a year away from now.
Caldwell and Yoshioka also both emphasized during the program that FTA and its independent contractors all thought that, “Their numbers were good – and financially viable.”
Once again, that was not what the FTA and its financial oversight contractor said. To the contrary they wrote the following to the City in the same letter,
“Further, the City should be aware that FTA’s standards for the financial rating are higher for entry into final design than for entry into PE. The higher standard for final design includes an assessment of the robustness of the financial plan against increases in costs, shortfalls in revenue streams, and competing demands on funding sources. Some elements of the current financial plan may not fare well in the stress tests that FTA will apply to evaluate robustness. These elements include the projected revenue stream from the General Excise Tax, the diversion of FTA Section 5307 funds from ongoing capital needs of the bus system, and the increasing share of the City’s annual budget that is required to fund the transit system. Were this plan submitted today in support of a request to advance the project into final design, its weaknesses would likely cause FTA to deny the request.”(underline added)
In a letter from Deputy DTS Director Hamayasu to FTA’s James Ryan, Hamayasu acknowledges that the Federal Management Oversight Contractor requires an independent projection of the GE Tax revenues. Obviously, Parsons Brinckerhoff has hundreds of millions of future revenues riding on the project’s progress and cannot be objective in making this projection.
We must assume that this is what the Governor is objecting to. She wants to see what the FTA wants to see. For example, an independent projection of GE Tax revenues and how the City will overcome the 5307 funding of the city buses. And this was before the last week’s $4.7 billion bombshell of the funding needed for the City’s agreement with EPA to patch up the sewers.
Check again the last sentence in the letter from FTA, “Were this plan submitted today in support of a request to advance the project into final design, its weaknesses would likely cause FTA to deny the request.” The only sources of construction funding that the City can use are the GE tax override, federal funding, and any state or private funds they may garner. State and private funds are out of the question, the federal funds are a stretch since no one other than New York has in recent times gained more than a billion dollars, and that leaves the GE tax override, which no one including the FTA and its oversight contractor has faith in.
In short, the City cannot get an independent contractor to validate the City’s projection of total GE tax override revenues of $3.7 billion. That is why the City cannot present a financial plan to the Governor that will stand scrutiny and have the robustness that the FTA requires.
July 13, 2010.
“A Hawaiian Sense of Place” – The Downtown Station: