By HonoluluTraffic.com

Former Governor Says City May Have Acted Illegally in Rail Procurement Contracts

The Honolulu Advertiser reports: “Honolulu may have violated law in awarding of design contracts”

See the full story on the lawsuit filed by former Democratic Gov. Benjamin Cayetano among others.

http://www.honoluluadvertiser.com/article/20100506/NEWS01/5060365/Honolulu+may+have+violated+law+in+awarding+of+design+contracts+

The Honolulu Advertiser Reveals Native Burial Issues for FEIS:

The May 5 story in The Honolulu Advertiser about protecting native burials deals with a recent Resolution by the Oahu Island Burial Council (OIBC) asking that the Department of Land and Natural Resources comply with Hawaii statutes regarding burial grounds along prospective rail routes. The Resolution is as follows:

“Whereas, the current [Programmatic Agreement (PA)] for the City’s rail project includes a phased approach for archaeological inventory survey, and

Whereas, [Hawaii Revised Statutes (HRS)] Chapter 6E-8 and 6E-42 preclude a phased archaeological inventory survey approach, and

Whereas, the State Historic Preservation Officer has the ability to safeguard the full authority of State historic preservation laws and the integrity of historic properties and burial sites, and

Whereas, the [O’ahu Island Burial Council (OIBC)] Rail Task Force has been guaranteed in numerous PA meetings that State laws would not be circumvented by the PA,

Therefore, the OIBC strongly recommends that the State Historic Preservation Officer object to any version of a PA that allows for a phased archaeological inventory survey approach, and that the OIBC communicate the same to the PA signatories in our capacity as consulting parties to the PA.”

The relevant Chapters referred to in the Resolution are at http://hawaii.gov/dlnr/hpd/hrs_6_e.htm In particular, the following excerpts would seem to be the most important.

“HRS §6E-43 Prehistoric and historic burial sites. (a) At any site, other than a known, maintained, actively used cemetery where human skeletal remains are discovered or are known to be buried and appear to be over fifty years old, the remains and their associated burial goods shall not be moved without the department’s approval.

“(b) All burial sites are significant and shall be preserved in place until compliance with this section is met, except as provided in section 6E-43.6. The appropriate island burial council shall determine whether preservation in place or relocation of previously identified native Hawaiian burial sites is warranted, following criteria which shall include recognition that burial sites of high preservation value, such as areas with a concentration of skeletal remains, or prehistoric or historic burials associated with important individuals and events, or areas that are within a context of historic properties, or have known lineal descendants, shall receive greater consideration for preservation in place. The criteria shall be developed by the department in consultation with the councils, office of Hawaiian affairs, representatives of development and large property owner interests, and appropriate Hawaiian organizations, such as Hui Malama I Na Kupuna O Hawai`i Nei, through rules adopted pursuant to chapter 91. A council’s determination shall be rendered within forty-five days of referral by the department unless otherwise extended by agreement between the landowner and the department.”

What is most important about the City’s failure to address the OIBC’s concerns, is that the City did not review a possible “feasible and prudent avoidance alternative” that the Section 4 (f) statute requires. Had the City done that during the Alternatives Analysis phase in 2006, they would have had to face the fact that both the Kamehameha Schools’ at-grade light rail proposal and our Managed Lanes Alternative proposal would have met the requirement of Section 4(f) and been preferable to the elevated rail project. For further detail see our letter to the Federal Transit Administration of November 4, 2009 at http://www.honolulutraffic.com/

FAA to Approve Honolulu Airport Rail Move. Really?

May 1, Honolulu Mayor Mufi Hannemann announced that the Federal Aviation Administration (FAA) will approve the move of the rail line one block mauka from the original alignment along Aolele Street.

The fact is that a couple of months ago the City was told by the FAA that the rail line was too close to the end of airport runways and the City had two choices. They could either move the rail line one block mauka or pay for moving the affected runways.

Then a month ago the City announced that it really had no choice, because of the cost of moving runways, and so would move the rail alignment one block mauka.

Now we get today’s “news” release telling us what they have already told us; they have taken one of the two choices that the FAA had given them.

This is just another case of the Mayor creating news out of thin air in an attempt to show that rail is not dead yet, folks, it’s still a done deal. Maybe it is, but we don’t see it that way and, in any case, there’s still a long road ahead.

The Long, Long Road to Rail Construction

We dealt briefly a month ago with the lengthy procedures yet to be dealt with before rail can be built. Here we enumerate them in more detail:

First, the Council must pass the budget bill including $1.3 billion for rail and also authorize the first bond issue for rail. The Council must be reminded that if they authorize construction funding for rail they are really authorizing the entire $5.3 billion. Once construction on rail lines is started they are always finished.

The City Administration must settle the airport situation to the satisfaction of the Federal Aviation Administration, the Federal Transit Administration and the State of Hawaii Airports Division. Council Chair Todd Apo said this might take three to six months. It may take longer if the FTA decides that a Supplemental Draft EIS is needed.

The City Administration must make sufficient changes to the Programmatic Agreement, which is required to be a supplemental part of the FEIS. We understand that still to be resolved are the dispute over surveying of the Hawaiian burial grounds that almost certainly lie along the rail route, the impacts on historic properties, and the city ordinance protecting mauka/makai view planes.

If all this occurs the City and the FTA will produce a Draft Final EIS, together with the financial plan that is part of its application for entry into the Final Design phase. We question whether this plan can be made “robust” enough (see April 23 entry below) to satisfy FTA, let alone the Governor.

Next would be the Governor’s approval of the Draft FEIS. The Governor’s office has said that this should take about three months to complete this work. Financially “robust” means that the analysis has to take into account the likelihood that the Environmental Protection Agency (EPA) will make the City bear the cost of a new $1.2 billion sewage plant to bring the system into EPA compliance and the detrimental effects that the Akaka Bill will have on City finances if it passes this year (see April 22 below). In addition what must be weighed is the almost certainty of cost overruns for rail’s construction and operations. All this will have to be weighed against the State’s own fragile financial situation and the current $6 billion unfunded liability in the State’s public worker pension fund.

In the unlikely event that the Governor finds the financial plan reasonable then she would sign off and the City and FTA would issue the Final EIS. After this there will be a thirty day period for public comments, and then another thirty days for the FTA to respond to the comments before it issues its Record of Decision (ROD).

Once the ROD issues the project is then legally “ripe” for a lawsuit to be filed, which we will do immediately.

Even when the ROD issues it still does not mean that the city can begin construction of the elevated rail line. Councilmember Cachola filed a formal report (see April 2 entry) to the Council after the delegation returned from Washing ton and he tells us that FTA was quite clear that, “No construction shall be done until the Full Funding Grant Agreement (FFGA) is signed, except for portions of the project to be constructed after receiving a Letter of No Prejudice (LONP). The City can only work on portions of the project as spelled out in the LONP.”

How Can the City Fund a “Robust” Financial Plan for Rail?

The Federal Transit Administration’s October 16, 2009, letter to the City approving its entry into the Preliminary Engineering (PE) phase of the project warned the City that,

“the City should be aware that FTA’s standards for the financial rating are higher for entry into final design [the next planning phase] 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 Therefore, continued development and strengthening of the financial plan will be a crucial part of the PE effort.”

The City is constrained by Council ordinance to only construct the line from GE tax surcharge revenues and any federal, state or private revenues:

“The city administration is authorized to proceed with preparation of an environmental impact statement for the locally preferred alternative (LPA), and with planning and preliminary engineering for that portion of the LPA (including any portion of any section of the LPA listed in section 2 above) that may be constructed within financial constraints (capital cost and any interest to finance that capital cost shall be paid entirely from general excise and use tax surcharge revenues, interest earned on the revenues, and any federal, state, or private revenues); provided that this portion shall constitute a minimum operable segment (MOS) for purposes of Federal New Starts funding eligibility.”

The City currently plans to use $300 million in federal bus money to build the rail line and substitute bus capital funding from the General Funding. Since it is plain that the underlying reality is that the City is using $300 million from its General Fund to build the rail, it is of doubtful legality.

The FTA says it is concerned about the “robustness” of the City’s financial plan. Given the likelihood of cost overruns, the financial threat of the Akaka Bill (see below), a shortfall of GE Tax revenues, and a smaller federal contribution, one must ask what the additional revenue sources will be.

The State Legislature is in no mood to either increase the GE tax surcharge or increase its life. The planned federal contribution relative to other cities is already totally out of line so that cannot possibly be increased. Private sources have already dried up. The State has its own funding issues to worry about.

So how can the “robustness” be ensured? Where are the funds to come from? Are we missing something? If any of our readers knows something that we do not, please let us know by logging onto http://www.honolulutraffic.com

Akaka Bill Adds More Uncertainty to Rail Financing:

If the Akaka Bill passes this year in the U.S. Senate, it will likely add considerable uncertainty to the City’s financial projections. A study last year by the Beacon Hill Institute found that the outcome of the state transferring land to the sovereign Native Hawaiian Governing Entity would be a significant reduction in the state’s Gross Excise Tax revenues upon which the rail depends to build the rail transit line.

Beacon Hill found that depending on how much land was transferred the state could lose between $320 and $536 million, of which about $25 to $40 million annually would be the shortfall to the City.

More on the web: http://www.honolulutraffic.com

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Malia Zimmerman is the editor and co-founder of Hawaii Reporter. She has worked as a consultant and contributor to several dozen media outlets including ABC 20/20, FOX News, MSNBC, the Wall Street Journal, UPI and the Washington Times. Malia has been listed as one of the nation’s top "Web Proficients, Virtuosi, and Masters" and "Hawaii's new media thought leader" by http://www.thewebstersdictionary.com Reach her at Malia@hawaiireporter.com