Feds withhold a half-billion dollars for rail over stalled financial plan

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Always Investigating has uncovered that the federal government has held off on a half-billion dollars in payments to the city for rail, or one-third of the funds pledged to the project.

Last fall, the Federal Transit Administration told Honolulu Mayor Kirk Caldwell it wasn’t going to release last fiscal year’s installment until the Honolulu Authority for Rapid Transportation submitted an updated financial plan. Now, they tell Always Investigating that they’re holding back a second year’s worth, because the plan still isn’t in.

The FTA held back from the city $250 million from fiscal year 2015, and now another $250 million for fiscal year 2016.

Why?

Officials are waiting for three key things: a revised project cost estimate, schedule, and financial plan that shows enough in other funds to cover the cost.

“Until FTA receives and approves a revised project cost estimate, schedule, and financial plan which includes a commitment of all of the local funds needed to cover that cost estimate, FTA cannot award the FY2015 or FY2016 increments of New Starts funds under the terms of the Full Funding Grant Agreement,” FTA told Always Investigating in a statement.

When we brought the information to Honolulu City Councilwoman Ann Kobayashi, who chairs the council’s budget committee, she said: “We have a budget meeting on Tuesday and we’re going over their budget, so I’m certainly going to ask about that money and I hope they tell us before the meeting. They should let us know all this bad news, so that we don’t always have to learn it from Channel 2.”

The FTA says it thinks HART’s plan is coming soon. But even when it gets it, there could be another catch. FTA says the plan has to show enough money to cover the whole cost of the project.

“They can’t send in the financial plan, because they can’t account for all this money they’re supposed to have,” Kobayashi said.

“Because they don’t know the final cost at the end?” Always Investigating asked.

“Yes, and we don’t know how much money is in there. We don’t know how much contingency there is. We don’t know what future expenses have to be paid,” she said, pointing to unresolved costs Always Investigating has previously exposed such as power supply, utility line undergrounding, and other unknown expenses and bids yet to come.

The recent general excise tax extension passed only guaranteed another $1.1 billion in locally generated revenue, which HART previously said might not be enough to cover the entire cost.

Always Investigating asked HART how it’s paying the bills cash-flow-wise without the $500 million the feds have paused.

“We still have about 13 percent of our FY13 funding and all of our FY14 funding still available to pay bills,” HART spokesman Bill Brennan said.

When will they finish the plan?

Honolulu Mayor Kirk Caldwell told Always Investigating in November 2015, when the FTA told him the first $250 million was being held back: “My understanding is they (HART) are working on all of those requests right now and that they’re going to be submitting something before the end of the year.”

So we asked HART what its revised submission date will be. A spokesman responded: “In December, the GET surcharge extension was still being debated at council. FTA instructed us not to provide an updated financial plan until after we knew what our funding would be. The mayor signed the extension into law in February. In March, FTA came here to perform what’s known as a ‘risk refresh.’ They will provide us something probably this summer, so we’re working with them to update both the financial plan and the project schedule.”

Federal fiscal year allocationFTA obligated amountsActual drawdown
2008$15,190,000$15,190,000
2009$19,800,000$19,800,000
2010$30,000,000$30,000,000
2011$55,000,000$55,000,000
2012$200,000,000$200,000,000
2013$236,277,358$205,001,194
2014$250,000,000Undrawn
2015$250,000,000FTA withholding
2016$250,000,000FTA withholding
2017$243,732,642
Total$1,550,000,000$524,991,194

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