Mayor calls for swift action after FTA rail letter: ‘This is not a time to play chicken’

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Mayor Kirk Caldwell says the Honolulu Authority for Rapid Transportation and the Honolulu City Council need to act now to ensure the city follows federal guidance on its rail project.

On Friday, Sept. 21, the FTA sent a letter, estimating that the cost of the project has risen to just under $8.3 billion, $134 million higher than projected. It wrote:

“The HART has not provided the revised Recovery Plan, nor has HART committed to a date by which it will deliver the revised plan.

The FTA has exercised considerable patience since requesting in August 2015 that HART provide additional information about the project budget and schedule in light of then-apparent problems. The FTA repeatedly has highlighted the need for action while working with HART to identify potential solutions. However, HART’s repeated difficulties with identifying cost  savings or sufficient funding have led to significant, recurring project schedule delays and cost increases.

… Decisive and expeditious action is needed to prevent further cost escalation.”

Click here to view the FTA letter in its entirety.

“It was something I was dreading receiving, but was expecting that such a letter would arrive, because of the delay in responding to demands that the FTA has made, both delays from HART and delays from the Honolulu City Council,” Caldwell said. “I’ve written numerous letters. Copies are available to you today, and I’ve made them available in the past, to both HART and the council along with request in press conferences here to act expeditiously, that this is not a time to play chicken or to delay, because we have an administration in Washington who, to say the least is, you don’t know what they’re going to do day to day, and an FTA that reports to that administration.”

The FTA set two deadlines for three issues that need to be addressed, and the mayor says HART and the city council should have done them months ago.

The FTA wants HART to send a plan on how to pay for the extra $134 million by Nov. 20. The deadline also applies to the city’s commitment of $44 million to the project.

“They’re serious and they made it clear to me they’re serious. We could spin it any way we want.  I just want to say let’s talk about what needs to be done instead of how they feel or what they think. Let’s do the work you were supposed to have done months and months ago,” said the mayor.

The $44 million still needs to be approved through two more city council hearings, and the mayor is worried that there won’t be enough time to get it done by the FTA’s deadline.

“This is not about playing politics. It’s about making important policy decisions that affect the bottom line,” said Caldwell.

“We have ample time to meet the deadlines imposed by the FTA. We can call various special hearings as required. It’s nothing new. We’ve done it before for other critical issues, so that’s probably the route we would go,” said council chairman Ernie Martin.

As for the $134 million, the mayor and Martin agree that city taxpayers cannot afford to pay for it, so they’re counting on HART CEO Andy Robbins fix the problem.

“The only other way to resolve that particular obligation is to look for cuts within the project itself,” said Martin.

“You think it can be done?” KHON2 asked.

“I’m confident that Andy can get it done,” said Martin.

The mayor and other city officials fear that if the FTA’s demands are not met, the city could lose more than $700 million in funding that’s still being withheld by federal officials.

The FTA also set a deadline of Oct. 21 on how HART plans to pay for the last part of the project, whether it will form a partnership with the private sector.

The HART board is scheduled to meet on that issue on Thursday. Robbins was out of town Tuesday but will be available Wednesday. 

Caldwell broke down the FTA’s three requests as follows:

1)

“…a decision on the procurement method for the CCGS segment be made within 30 days of the date of this letter.”

“They want a decision on the procurement method for our city center…. and that’s due by Oct. 21, right around the corner,” Caldwell explained. “What they mean by that is it going to be design-build? Is it gonna be PPP (public-private partnership)? Is it going to be some combination of that? There are different ways to do it, and right now we been working on a design-build method. PPP is something new.”

2)

“…the revised Recovery Plan — with a financial plan sufficient to cover the total estimated project cost — be provided to FTA no later than 60 days from the date of this letter.”

“What they mean by that is we submitted a recovery plan and financial plan back in September of 2017, Sept. 15, 2017. They have responded to that plan and said we disagree with it in two areas,” Caldwell explained. “One that there is a lot of debate at the legislature, and I said this would happen, but they said, ‘We think you need more money. We believe you need $134 million more than what you have covered in your financial plan, and part of that is because we believe you’re not going to complete it within the stated date in your recovery plan. It’s going to take almost another year to November of 2026 instead of the end of 2025, and therefore you need to come up with how you’re going to address that shortfall.'”

3)

“…the $44 million identified in HART’s previous financial plan of September 15, 2017 be fully committed towards the project within 60 days.”

“These first two are HART and HART. This is Honolulu City Council, and the critical word is fully commit the $44 million,” Caldwell said. “They don’t define what that means, but I don’t think they mean let’s talk story like we been. I don’t think it means let’s just put a (resolution) in and sit on it, or let’s put it in the HART budget and do nothing. They want to see commitment.”

HART’s executive director says to keep rail on time and on budget, it’s looking to utilize a private-public partnership for the remainder of the project as well as for long-term operations and maintenance.

That proposal will be heard by HART’s board of directors on Thursday, and put to a vote, one that Caldwell hopes will go through.

“They now have the clear authority under the charter amendment from two years ago to do this,” Caldwell said. “On Thursday, they need eight members to show up to vote, and then they need all eight members to vote up on the delivery method, and if they don’t have the the quorum, they can’t vote, so they can’t show that commitment that they’re demanding. We’ll have to see what happens on Thursday, and I’m hopeful they’re calling and making sure they have eight board members. I’m equally hopeful that they have counted their votes and they know they’re going to go for PPP.

“I also commit with conditions, and the council committed with conditions,” he added. “The council said subject to the demands and conditions stated in the audit that the city auditor did, in mind boil down to their essence is that this PPP method of delivery has to make sure it costs no more than the $214 million we put in the financial plan that the city has to cover. PPP is supposed to be less, so we’re not going to pay more. It has to come under $214 (million), and hopefully it saves all that $214 (million), because they stated PPP means it’s going to cost less.”

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