The designs weren’t ready. Construction was delayed. The bids were too high. Tax revenue dropped. Federal funds never arrived. The CEO was let go. And despite some rosy predictions, no part of the Honolulu rail system ever opened to the public in 2020 as promised.
The rail project has had troubles from the start, but 2020 was such a bad year that it is unclear exactly how the Honolulu Authority for Rapid Transportation will pick up the pieces.
To gauge how serious the setbacks were last year, it helps to recall the city signed a deal with the Federal Transit Administration in 2012 pledging to build the 20-mile system with 21 stations for $5.2 billion. The entire rail line was supposed to be finished and open for public use in 2020.
But by this past fall Honolulu Mayor Kirk Caldwell was projecting the rail line will not be done until 2033, and will cost an astonishing $11 billion. The HART board of directors adopted a new budget last month that essentially confirmed Caldwell’s cost estimate.
That marks the third time since 2012 the city has announced huge rail cost overruns, and this budget shortfall may be more difficult to resolve than the previous two.
The Legislature approved rail bailouts worth $1.5 billion in 2015 and $2.4 billion in 2017, but now the state is coping with its own budget crisis triggered by the pandemic.
It would be “too difficult” for the state to step in again with more cash to support rail, said Senate Ways and Means Committee Chairman Donovan Dela Cruz.
With a new mayor and a new City Council taking office, it is too soon to say what the city will do, but Dela Cruz suggested that instead of asking the state for more money, the city should leverage its zoning authority on lands it owns along the rail line to raise cash to complete construction.
P3, Taxes And Federal Spending
HART spent much of 2020 anxiously awaiting the results of a complex solicitation for a public-private partnership, or P3 agreement, but that effort failed in the end.
The plan was to award a construction contract to build the last 4.1 miles of the rail line from Middle Street to Ala Moana Center along with eight urban train stations and a 1,600-stall parking garage and transit center at Pearl Highlands. The P3 partner would have also maintained and operated the rail line for 30 years.
But P3 agreements are unusual for government entities in Hawaii, and this one was understood to be a gamble. The FTA, which has committed to provide $1.55 billion to help finance the rail line, held back about $744 million while it watched to see how the P3 bidding played out.
HART had estimated the construction component of the P3 agreement would cost $1.4 billion, but the two potential P3 partners had other ideas. They both submitted construction proposals for more than $2.7 billion — an unaffordable price — and the city withdrew from the process.
HART had hoped the FTA would release additional federal funding for the rail project by last spring, but with the collapse of the P3 initiative, those federal funds may be delayed indefinitely.
The FTA hasn’t released any new funding to HART since 2014 because it wants the city to demonstrate it has a workable plan and the necessary funding to complete the rail project, something that hasn’t happened yet.
Meanwhile, the delay in federal funding put extra financial strain on HART as tax collections for rail declined in the economic downturn triggered by the pandemic.
The rail authority originally expected to receive more than $355 million in 2020 in hotel room and excise taxes to help finance construction, but $62 million of that money never arrived. It evaporated as tourism shut down and the Hawaii economy sagged.
A Sudden Stop On Dillingham
Construction at the city center end of the rail line also foundered last year.
For years, transit officials have flagged Dillingham Boulevard and its nearly two-mile long gauntlet of utility lines as a major obstacle to building rail.
In 2018, HART awarded a contract of up to $400 million to Nan Inc. to relocate what it estimates to be nearly 40 miles of utility line running along the last four miles of the route. Two-thirds of that work lies on Dillingham, rail officials say.
The goal was to get that work done ahead of the station and guideway construction and to help keep construction costs in check.
Last fall, however, the HART board’s Finance Committee estimated it could cost more than double that $400 million amount. Meanwhile, only 6.5% of all the utility work along the final 4.1 miles has been done, according to the agency’s most recent available monthly report.
Nan initially wasn’t given much to do in 2018 as HART spent months examining potential ways to cut down on the utility work and save on costs. By 2019 it was clear the agency wasn’t moving fast enough, and that it would need to take more traffic space on Dillingham and work almost around the clock to catch up.
The progress accelerated in March, when traffic on Dillingham was reduced to two lanes between Middle and Mokauea streets, allowing Nan crews to work faster just as the COVID-19 pandemic hit.
But progress stalled about a month later when heads of several city departments involved in the utility work expressed misgivings about the designs and requested variances, outgoing HART CEO Andrew Robbins said.
Top city officials rejected HART’s designs for the work, not only for being incomplete but also for requiring special variances to fit all those lines beneath the street, they said.
Outgoing Planning and Permitting Director Kathy Sokugawa told the City Council in October that HART didn’t submit complete drawings because “they weren’t ready. But they wanted to proceed anyway because they had the Nan contract facing them and they needed to have that started.”
The failure to get that complex work done is at the heart of rail’s current financial and schedule woes.
It helped derail efforts to award the P3 contract — HART was unable to tell the bidders exactly when they would get access to the construction site — and it’s driving the project’s latest round of jarring cost increases and schedule delays.
Efforts to redo the designs and resume the work will be among HART’s top priorities in 2021, officials say. It’s critical to resolve because whoever is selected to build the last 4.1 miles of elevated track into town will need to know when they’ll have access to sites on Dillingham.
The traffic lanes on Dillingham have now been reopened and HART has gone back to the drawing board with engineering firm AECOM, whose design contract with the city has grown from its original $44 million to at least $67 million.
The redesigns are expected to take at least another year, according to HART, and there’s likely to be a separate process to acquire more property for the space needed to squeeze utilities from about a dozen different companies and agencies under the road.
Among them are a 42-inch water main that provides about 25% of the water needed to supply the city, according to the head of the Board of Water Supply, and 138-kilovolt transmission lines that power about 70% of Honolulu’s downtown area, according to Hawaiian Electric Co.
In September, HART officials identified 13 “choke points” along Dillingham where they didn’t have the room needed to fit all the utilities.
That number has since grown to 31. HART spokesman Bill Brennan said the initial count of 13 was based solely on the city’s sewer and water lines. The updated number includes the other utilities, he said.
HART also needed to get approvals from all of the other dozen or so utility companies and agencies whose lines run along the corridor, which rail officials said was a cumbersome process.
Dillingham remains a daunting stretch of road to add a major piece of infrastructure.
“It almost sounds crazy. But the problem for this community is that’s where the rail should be, so that’s where we have to build it,” Robbins said recently. The surrounding Kalihi area is home to some 10,000 residents.
It’s not clear when the work will be done. And whatever the designs show, crews are certain to find utilities in unexpected places once they resume digging into the street, officials say.
Interim Opening Delayed — Again
In late 2019, HART was predicting the first segment of rail from East Kapolei to Aloha Stadium would have an “interim opening” by the fall of 2020 so the public could finally ride part of the rail line, but that milestone was also put off.
Delays in testing of the driverless train system meant it was still not yet “ready to ride” at the end of the year, and city officials were weighing whether an additional delay in the interim opening until late this year might help to cut costs in what will be a tough budget cycle for the city.
A spokesman for HART now says the Leeward segment of the rail line, which includes nine stations from Kapolei to Aloha Stadium, should be ready for passengers by next summer. But a spokesman for the city Department of Transportation Services, which is responsible for operating the system, declined to say specifically when that first segment might open.
With all of the delays and setbacks for the project in 2020, the HART Board of Directors declined to renew the contract for HART CEO Robbins when it expired at the end of the year, creating even more uncertainty for what is the largest public works project in state history.
Robbins, who took charge of the development of rail in 2017, was an outspoken advocate for using the P3 approach to complete the project. His removal became official within weeks of the collapse of that initiative after construction bid prices came in too high, and the city withdrew from the procurement.
HART announced last week that city Environmental Services director Lori Kahikina would become interim executive director, replacing Robbins on Jan. 1.
That turbulent year for rail leaves the project on uncertain footing as Honolulu Mayor Rick Blangiardi takes office. Blangiardi has said he will not raise property taxes to pay for rail, but said he does not have enough information yet to map out exactly how HART and the city should proceed.