Politicians are Sinking Honolulu into $10 Billion Dollars of New Debt and Taxes

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BY PANOS PREVEDOUROS – Fact: Omaha-based Kiewit Pacific Co. was awarded a $482.9-million contract for the first phase of construction for the 20-mile Honolulu Rail Transit Project.

News Report: A joint venture between Kiewit Pacific Co. and Albert C. Kobayashi Inc. has been awarded a $195 million contract to build a train depot for Honolulu’s planned $5.5 billion elevated commuter rail line.


Honolulu has a traffic problem and the Hannemann/Caldwell administration “solve” it with a rail transit solution. The solution is wrong. It reduces congestion by only 1%. But the rail is a gravy train for politicians and special interests. Rail bidders and consultants are heavy contributors to the Hannemann/Caldwell administration.

News Report: Past Mayor Mufi Hannemann joined others at the official groundbreaking ceremony for the $100-million high-tech traffic management center building on Alapai Street.

Honolulu has a traffic problem and the Hannemann/Caldwell administration “solve” it with a building. Note that no high ranking state or federal official participated in the groundbreaking which was simply a pre-election serving of pork.

These are very recent examples of a corrupt political environment. Rail contacts are doled out while rail is not a legal system to build.  It is many months away from concluding its environmental process. The process may not conclude successfully.

Meanwhile, Honolulu does not have the funds required to build the proposed system.

News Report: The city might use general fund money to cover costs associated with building a planned $5.5 billion elevated commuter line. The scenario is “on the table” said city Transportation Director Wayne Yoshioka. It was the first time the city has publicly stated that general fund revenues, which includes property taxes, could be used to help pay for the 20-mile, East Kapolei-to-Ala Moana project. (Source: https://www.staradvertiser.com/news/20100715_Citys_general_revenue_might_pay_for_rail.html)

More important is the Federal Transit Administration rating of the proposed rail system is Low; I quote:

Capital Cost Estimates, Planning Assumptions, and Financial Capacity: LOW

· Assumptions regarding growth in GET revenues and Section 5309 bus discretionary funds are optimistic compared to historical experience. Financing costs appear to be understated.

· The financial plan show the City has little ability to address funding shortfalls or cost increases.

(Source: Appendix A in https://www.fta.dot.gov/publications/reports/reports_to_congress/publications_11092.html)

Add to these the huge liability of our sewers and the July 2010 consent decree with the EPA.

News Report: A consent decree requiring renovations of the city’s aging sewer system and more than $1 billion in upgrades of Oahu’s two main sewage treatment plants is expected to raise sewer rates for Honolulu residents. The 94-page consent decree spells out specific upgrades to the sewage collection system that must be completed over the next 10 years. Mayor Mufi Hannemann had opposed the upgrades for years, at one point placing the cost at $1.2 billion. (Source: https://www.staradvertiser.com/news/20100715_Sewer_fix_means_fee_hikes.html)

The sewer fix and the EPA consent decree (these are two different things) are likely to cost about $4.7 billion.  Add $5.5 Billion for the rail and Oahu taxpayers face a $10 Billion fiscal liability.  For a city with a typical capital improvement program (CIP) of no more than One Billion dollars per year this spells mismanagement and financial disaster.

Hawaii residents are over-taxed and carry the highest credit card debt in the nation.

News Report: Hawaii consumers have racked up the highest credit card debt in the nation, carrying an average of $9,296 per person in the first half of the year — 17% higher than the national average.

(Source: https://www.staradvertiser.com/news/20100715_Hawaii_leads_nation.html )

It is clear that Hawaii politicians have forgotten how to account for and how to add up liabilities for infrastructure projects.  Honolulu has fewer than 400,000 taxpayers and more than 10 Billion dollars in new infrastructure liabilities. Even if you love rail, you got to let it go.  We simply cannot buy it.

I have the right focus and professional abilities to get Honolulu out of its impending fiscal chaos.

Panos Prevedouros is professor of Civil Engineering at the University of Hawaii-Manoa and candidate for Mayor of Honolulu.  He can be reached at 63-PANOS (637-2667) or at Panos.Prevedouros@Gmail.com