Honolulu’s Money Train

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BY WENDELL COX – Honolulu is set to construct an ambitious urban rail project. It’s a $5.125 billion behemoth that this metropolitan area with less than a million residents may not be able to afford.

Honolulu’s Beleaguered Residents


Critically, there is plenty of competition for the scarce dollars that Honolulu residents have to spare. The city’s basic infrastructure is in bad shape.

(Sewer) Water, Water Everywhere: A consent decree signed between local officials and the Environmental Protection Agency requires major upgrades to the sewer system. Sewer overflows are not unusual. Just a few days ago, 51,000 gallon raw sewage spilled into a local stream. The state issued a brown water alert for the entire island of Oahu (which is also the combined city and county of Honolulu), including Waikiki Beach and all other beaches. As of this writing, the brown water advisory has not been cancelled. Just in the last year, the state has reported 17 sewage spills and four brown water alerts. For this to happen in a highly tourist dependent economy is nothing short of astounding.

More than Leaky Pipes: The city’s water system is in need of major upgrades. From 2004 to 2009, water main breaks were virtually a daily occurrence. In an effort to solve the problem, the city has raised water rates 60 percent in the last five years and plans another 70 percent increase over the next five years. How much more will be required after that is anyone’s guess. “How are people going to make it? I just don’t know” reacted City council Budget Chair Ann Kobayashi.

Unfunded Government Employee Liabilities: In just three years, unfunded city and county employee pension and retiree benefits have risen from $15,000 to $21,000 per Honolulu household. The state’s actuarial consultant says things are going to get worse. The demographics are skewed against financial control, since people are living longer, and the number of retirees is rising relative to the workers who must pay (most of whom cannot even dream of such rich benefits).   All of this means higher tax bills for Honolulu households.

High Cost of Housing, High Cost of Living: Honolulu residents already endure the most unaffordable housing  in the nation, with median house prices 8.7 times median household incomes. That is three times Dallas-Fort Worth.  Honolulu’s overall cost of living is also the highest in the nation, outside six metropolitan areas in the greater New York and San Francisco Bay Areas. Honolulu residents pay $1.41 to buy what $1.00 buys in St. Louis, 1.24 for each $1.00 in Austin and $1.21 for each $1.00 in Phoenix.

Choices: This is not about easy choices. The sewer remediation, water system maintenance, government employee pension and government employee retiree health care benefits are mandatory. The rail expenditures are not.

The Rickety Rail Project

Yet the city of Honolulu would tax its residents even more to pay for a 20 mile rail line to empty farmland well beyond the urban fringe. This is a project not unlike the early 1900s land speculation schemes of Henry Huntington in Los Angeles and the Sweringens of Shaker Heights (Cleveland). There is, however, one important difference. The Huntington and the Swearingens bet their own money. Honolulu is betting the money of its taxpayers.

End of the Honolulu Rail Line

The city hopes to receive $1.55 billion from the federal government, with local residents left to pay a hefty 70 percent of the cost. This $3.575 billion local share would create the highest tax burden for any urban rail line ever built in the nation, at more than $10,000 per household. But residents should “thank their lucky stars” if that’s all they have to pay, given the history of cost overruns on such projects around the world.

Stacking the Deck:

The Federal Court Challenge: The planning process is being challenged in federal court. The plaintiffs argue that the rail selection process eliminated more cost effective options with biased analysis. This would not be the first time.

Annie Weinstock, Walter Hook, Michael Replogle, and Ramon Cruz of the Institute for Transportation Development and Policy (with a foreword by Oregon Congressman Earl Blumenaur),  cited circuitous routing of a busway that biased ridership forecasts in favor of light rail for the suburban Washington Purple Line. Weinstock, Hook, Repogle and Cruz refer to a similar “deck stacking technique” that favored an expensive rail project over a busway in the suburban Washington Dulles corridor. They fault local officials more than federal:

While there is no outright pro-rail bias at the FTA, there is indeed FTA complicity in the rail bias of city and state level mass transit project sponsors. The FTA, when evaluating New Starts and Small Starts project applications, tends to bow to political pressure to favor locally preferred alternatives and ignore certain forms of rail bias by the project sponsors

Pulling the Plug on Rail? Former Governor Ben Cayatano has filed to run against Mayor Carlisle in the August 2012 election. In announcing his entry, Governor Cayatano said “I will pull the plug on rail.” Polls show Mr. Cayetano ahead of both Mayor Carlisle and a third candidate.

Capital Cost Escalation: A state report indicated that construction costs could rise well above forecast. Every penny above the $5.125 billion capital cost will be the responsibility of local taxpayers. Based upon the international experience, this could easily raise the per household cost from $15,000 to $20,000.

Ridership Optimism Bias: Echoing general concerns raised by Weinstock, Hook, Repogle and Cruz (above), the state report indicated concern over an optimism bias in the ridership projections. For example, the city expects 60 percent of rail riders to use the bus to get to the train.  This is four times the rate of the largest new rail system built in the nation (Washington’s Metro).  Using the bus to connect to the train makes travel much slower and this factor has often been over-estimated by rail planners. This unrealistic assumption alone could qualify the Honolulu ridership forecast as among the most inaccurate in history.  Fewer riders. more money out of residents pockets.

A Billion Here, A Billion There: As if all of this were not enough, a report for the Federal Transit Administration, obtained by the Star Advertiser through a freedom of information request, indicates that the operating costs of the transit system may be understated by as much as $1 billion over the next 20 years. That’s $3,000 per Honolulu household (Note 1).

Federal Doubts: Federal Transit Administration Regional Administrator Leslie Rogers expressed concern about Honolulu’s ability to afford the project in a letter to local officials, noting that the funding program is insufficient. Local taxpayers likely will need to pony up more.

Debt Limit Suspended: After having claimed it could afford the rail debt, the city suspended its debt limit — a fact discovered four months after the fact by the Star Advertiser.  Usually, breaches of trust like this become evident only much later in the rail construction process. A suspended debt limit means more money out of taxpayer pockets, or worse. Jefferson County, Alabama filed bankruptcy after not being able to afford payments on its sewer debt.

How Would Rail Change Honolulu

With rail, Honolulu there are two ways that Honolulu will be changed:

What Will Change: Walling Off the Waterfront. The elevated design of the rail system is so intrusive that the local chapter of the American Association of Architects opposes the proposal. The elevated line would run directly in front of the waterfront. Its oppressive design would separate the rest of the historic Aloha Tower area from the rest of the city and could preclude future attractive “placemaking” development (see lead photo, courtesy of the Honolulu Chapter of the American Institute of Architects).

No Traffic Relief: Despite being only the 52nd largest metropolitan area in the nation, Honolulu has the second worst traffic congestion in the nation (see figure), according to INRIX, the leading international reporting source. Honolulu and Los Angeles are the only US metropolitan areas ranked in the worst 25 out of 200 in Western Europe and the United States. Even with the rail system, local plans call for traffic congestion to get worse.

Getting the Choices Right

Incumbent Mayor Peter Carlisle recently returned from a Potemkin Village tour of Manila, raving about that city’s rail system. Governor Cayateno, whose familiarity with Manila extends well beyond a scripted tour, called Mayor Carlisle’s comparison with Manila “comedic,” noting that most residents cannot afford a car or that Manila has more than 10 times as many people.

Manila Rail System: Part the Mayor Did not See

The mayor may not have been aware that more than 4,000,000 – more than one-third – of Manila’s (National Capital Region) residents live in slums, shantytowns and informal settlements, where sewers are rare if not non-existent. Government projections indicate that the slum population will rise to 9,000,000 by 2050. More than one-half of Manila’s population will be in slums.

Manilia Rail

Manila Slum

In his recent “state of the city'” address, Mayor Carlisle mused “Manila without rail transit would be unthinkable.” That may be the view of an itinerate visitor, but not of the majority who never ride it. For millions, a Manila with sewers is unimaginable. First world urban areas all have sewers. But many do not have rail systems. Honolulu could use some genuine prioritization and less contempt for the hard earned income of its residents.

Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life”


Note 1: Illinois Senator Everett McKinley Dirksen, who was minority leader of the United States Senate in the 1960s is reported to have said: “A million here, a million there, pretty soon, you’re talking real money.” The line has been often repeated, though the rise in government spending is indicated by the inflation from “millions” to “billions.”

Note 2: Manila’s rail system serves a very small market and represents a small share of transit ridership. The latest available data suggested that barely five percent of transit ridership was on rail.

Top Photo: Visual of rail system in downtown Honolulu (courtesy of American Institute of Architects, Honolulu Chapter)

Photo credits: All others by author





  1. It is well understood by the tax and fee payer of the State of Hawaii, and the City and County of Honolulu resident simpletons as our City Council and Mayor would have us brow beaten and verbally abused believe, when our input is not warranted at any juncture on this expenditure of our hard working dollars. All I can say is, I was for it when it was not killing me, but then after you stuck the knife in and started twisting it, took it out and and repeated the action many times over without having stopped yet? No, NO and NOOOO! Not because you were never honest from the start, but because you chose to deceive willingly all the while knowing it would HARM MANY! and you never adjusted for the losses. You are not GODS! Mere humans without a conscience.

  2. Congratulations on becoming the fake, made up, biased news source for Hawaii (i.e. Fox News Hawaii). Too bad nobody reads this garbage.

    Speaking about garbage, just so we’re clear, the sewer & water system repair project is independent of the rail project. Whether we build rail or not has very little if any impact on how we proceed with the sewer project, which by the way is proceeding as scheduled. The sewer project is and will be repaired regardless of rail, but hey why let little things like facts and common sense cloud the picture.

    And your “stacking the deck” argument, talk about the pot calling the kettle black. The first time the anti-rail contingent truthfully reports the whole truth instead of nit-picking “facts” out of context or creating straw man arguments will be the first time. I’m not holding my breath.

    Quick question: How much did you pay the “esteemed” Wendell Cox? Is there not a person more anti-rail on the planet the Wendell Cox? And since when is he a professor? Is this a joke? Or are we just making up credentials to suit our own needs? At the very least, tell us who Wendell Cox really is…

    True Facts: Wendell Cox is the owner and operator of the company Urban Tours by Rental Car and was called by the Sierra Club an “itinerant anti-public transportation gun-for-hire.”

    Just because Wendell ran the LA rail system, and later, at the behest of buddy Newt Gingrich, the Amtrak system into the ground to suit their own radical conservative agenda has no bearing on Honolulu. None.

    Hawaii “Reporter,” where is your integrity? For shame.

    • Roads, rail, buses, water mains, sewers, parks and government pensions are 100% taxpayer supported form the same and overburdened Honolulu taxpayer, so “mindfulcitizen” seems to have lost his or her mind by saying that rail at five plus billion dollars is an “independent” city project.

      Please contradict Cox’s facts instead of the typical railigious character assassination that you provided.

      • It’s not character assassination if it’s true. https://en.wikipedia.org/wiki/Wendell_Cox

        Go ahead look it up yourself I’ll wait…..

        You seem to be a little confused to what independent means so let me elaborate:
        Rail and sewer are indeed independent projects because of these two things called: 1. A budget and 2. the Law.

        1. Monies for rail and for the sewer repair project have been individually budgeted and independently contracted. The sewer will be fixed regardless of whether or not we build rail. To state otherwise is false.

        2. The law states that funds raised for rail from the 0.5% increase in the GET can ONLY be used for rail. Period. These monies cannot be diverted under any circumstances and suggesting such is intentionally misleading. Therefore, cancelling rail will have little if any impact on our City’s ability to manage the sewer repair project.

        Get it? Rail and the sewer project are independent.

        Cox’s facts? Are you joking? As a Professor you should be able to recognize the difference between an opinion piece paid for by an organization with a clear agenda and “facts,” which is fine, but let’s not BS and call it “facts.” Moreover, the entire piece is an exercise in irrelevancy and/or an obvious attempt to distract the reader from the real issues.

        Since you asked let’s take a look at Mr. Cox’s “facts:”

        + Government unfunded liabilities? Irrelevant because monies from rail cannot be diverted. see above.
        + Relative cost of living? Really? Milk is cheaper in St. Louis, so maybe we shouldn’t improve our transportation system? You’re kidding right?
        + Walling off the waterfront? Yah, I wish we could bury it underground too but there are issues with doing it underground that makes it very difficult. Talk about walling off, the H1 isn’t exactly a work of art either. Personally, I think the rail is beautiful, especially when riding it. Imagine the views from the train. It will breathtaking, But hey, to each their own.
        + The Feds paying almost 1/3 of the cost is a bad thing? Okay, what? The reality is that this is a unique, historical opportunity we cannot pass up. Inouye isn’t getting any younger, interest rates aren’t getting any lower, labor isn’t getting any cheaper, and the President isn’t getting any more “Hawaiian.” Build it now, or wallow in our miserable traffic for the foreseeable future. Fact: there is no money currently available for any alternatives.
        + A State report said costs could rise significantly? Well, duh. It’s called being thorough. Costs could also go down, like we have already seen. And monies could be ahead of schedule, which they are.
        + A Cayetano win wouldn’t pull the plug on the project it would just make costs skyrocket. A Cayetano win would be disastrous for Honolulu. He says he isn’t a one issue candidate, but is anyone talking about anything else? The city would come grinding to a halt. Nothing would get done and law suits would fly left and right. Cayetano = Economic Disaster. If he really cared about Honolulu he wouldn’t run, but instead join the HART board and help get this project done right.
        + Federal doubts? There are no federal doubts outside of Cayetano. You an your myopic ilk are what is causing whatever doubts there are. In fact, Roy LaHood said that of any project under consideration in the country the Honolulu project is the one that has been done the most “by the book” and gave it his full endorsement.
        + It’s going to be more expensive than we thought? Yah, yah we know that you and your group don’t believe in the city’s ability to get anything done on time and on budget. We should all be concerned here, but the truth is Hawaii has never before taking on a project of this magnitude but also has never before planned something this well. So far, everything is on time and under budget except for you guys mucking things up.
        + Manila? On one hand Cox say’s Manila has 4M people so it’s not a good analogy but than he says rail created slums so it is. It sounds like he’s grasping for straws. Firstly, it’s not a good analogy. Secondly, the rail didn’t create those slums. I think most would agree that Manila has much, much bigger problems that may have led to the slums. Like, I don’t know, crime, corruption, illiteracy, desperate poverty but hey it’s probably the train.
        + It won’t relieve traffic? Okay, riddle me this batman… name one way someone can get from West Oahu to Downtown without contributing to traffic right now. Come on… I’ll wait… No, nothing. That’s right, because there isn’t any. Buses and cars contribute to traffic, elevated rail does not. Any questions? It doesn’t take an EIS, a fancy engineering degree, or a speech taken out of context from the Mayor to tell me that elevated rail does not contribute to traffic because it’s common sense.

        Let me reiterate, if you get on the train you will not contribute to traffic on the H1. No traffic… none… ever. If you drive, or ride with a friend, or catch a bus you will contribute to traffic at all times and in all ways. Every time, all the time.

        Ride train = no traffic, ever. Drive = same or more traffic as there is right now.

        Now imagine West Oahu with 10,000 more homes and 20,000 more cars. How about 30,000 more cars? Or a 100,000? Get the picture?

        Armed with these facts, I’ll let you decide if that means the train will be a positive or negative influence on traffic.

        To be clear, no amount of roads will EVER permanently reduce the amount of traffic. In fact, more roads and freeways will ultimately result in MORE traffic. More roads = more cars = more traffic.

        We must build rail or be resigned to wallow in traffic misery for the foreseeable future. To repeat, there are NO monies currently available for any alternatives. With rail there is a significant risk, namely it could cost more than we thought. I acknowledge this considerable risk. However, there is also significant upside. Fore example, less traffic on H1 for drivers, no traffic for rail riders, better planned development, less developmental pressure on rural areas like the North Shore, a more sustainable and livable city that can compete for talent with the rest of the world; These are among a few of the potential benefits.

        Without rail there is no doubt what we will have… the same as now, only worst. We live on an island but not in a bubble. The rest of the world is making investments in the livability of their respective cities. They will not wait for us.

        My question for Honolulu is simple. Do you want the same? Or do you want a chance at better?

    • My answer to you is as simple as your question and considerably shorter then your diatribe (that failed to rebut any of Cox’s facts/opinions). I want the existing infrastructure fixed and maintained. I want to keep my money in my pocket. I want this boondoggle stopped. See..simple.

  3. I Urge anyone to showme some number’s…. that will pay for this… Here are my number’s…. prove I’m wrong..

    go for it…. I’m waiting….?

    read below….——–>

    Vegas Lite rail Cost 4 Billion 4 mile lite rail—–> Ridership —–> 50 Million in 5 years….. still Bankrupt…
    Ok——-> Hawaii 5 Billion —- 15 mile lite rail—no way—- I will ignore this part…
    Now that means… We need every resident to Ride the Light 50 times a year… to Break Even…
    if and only… they think they can build 15 miles for 5 Billion… when vegas only did 4 miles for 4 Billion…
    A remote pacific lsland… should be far cheaper… no skill workers or steel on island…… yeah right!
    Now… if you want to make some money…. buy options… on the Lite Rail Bonds…that they will goto to Junk Bond Status….
    Now You will make some… $$$$…I bet WallStreet… will!
    Replace—-> Las Vegas with Oahu… and that will be the Lite Rail Reality…
    Las Vegas Monorail files for Chapter 11 bankruptcy protection
    Las Vegas: Monorail ridership drops nearly 12%
    Las Vegas: Monorail bonds fall to “junk” status
    Las Vegas Monorail: “Woeful” ridership prompts financial jitters
    Las Vegas Monorail extension plans in doubt after FTA nixes funding
    Las Vegas Monorail: More technical limitations coming to light?
    Seattle and Las Vegas monorails reopen
    Las Vegas eyes light rail, other options for interurban service
    Las Vegas monorail…Shrink-wrap ads removed?
    Las Vegas Monorail shut down
    Las Vegas Monorail: Troublesome Technology in a Unique “Niche” Application

  4. The rail as planned is nothing more than a money grab serving few, if any real riders.

    Design and plan a rail that runs the southern edge of the island and you might, might, have something folks would be interested in.

    The rail should be a direct route maximizing the potential for ridership and should include Kapolei, HNL/Salt Lake, downtown, Waikiki, UH, and Hawaii Kai. Otherwise, we don’t need, want, or can afford to pay for it.

  5. …and build it as a second level over the H1/201 and Kalanianaole highway similar to the HOV lanes on the 110 freeway in Los Angeles. The land is already owned and the construction can be done with a minimum of traffic issues.

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