GOVERNOR LINGLE TRANSMITS INDEPENDENT FINANCIAL ANALYSIS OF HONOLULU RAIL TRANSIT PROJECT TO MAYOR CARLISLE, GOVERNOR-ELECT ABERCROMBIE
HONOLULU – Governor Linda Lingle today transmitted the final report of an independent financial analysis of the proposed Honolulu Rail Transit Project to Mayor Peter Carlisle, Council Chair Nestor Garcia and Governor-elect Neil Abercrombie. A copy was also sent to the Federal Transit Administration and Secretary of Transportation Ray LaHood. The report is meant to provide an objective assessment of the overall financial impact of the rail project to Hawai‘i taxpayers in the future.
The State Department of Transportation contracted with Infrastructure Management Group (IMG), Inc. to conduct an economic analysis, financial assessment and evaluation of the rail project in September 2010 as part of the State’s obligation to perform due diligence to determine if the multi-billion dollar project can be sustained and maintained over the long-term. While the project would receive some federal funding, Hawai‘i taxpayers would pay for most of the cost to build, operate and maintain the rail system.
“I appreciate the thorough financial review of the City’s rail project that IMG performed over the past three months,” said Governor Lingle. “Although the Office of Environmental Quality Control has not completed its legally required review of the Environmental Impact Statement and therefore has not sent me the final version for my approval and acceptance, I am transmitting the independent financial report to Mayor Carlisle, Council Chair Garcia, Governor-elect Abercrombie as well as Secretary LaHood and the Federal Transit Administration for their review, consideration and application as they deem appropriate. I am confident these officials will appreciate the need to fairly assess the economic impact of this proposed rail project on Hawai‘i taxpayers today and for generations to come.”
The scope of the financial review included an analysis and evaluation of the local share of costs to build, operate and maintain the project, as well as an assessment of the adequacy of the General Excise Tax (GET) surcharge revenues and prospective federal funds. IMG analyzed the reasonableness and accuracy of the City’s plans and revenue forecasts to fund the single largest and costliest public works project that has ever been undertaken in Hawai‘i.
IMG was assisted by the Land Use and Economic Consulting Group of CB Richard Ellis and Tomas A. Rubin, an independent transit finance and accounting expert.
The cost of the independent financial review was about $350,000, which was funded through the State Highways Fund.
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MORE Full Text: Rail Financial Plan Assessment Report
AP: Analysis of Honolulu rail plan raises key concerns
The 135-page report by the Infrastructure Management Group Inc., released Thursday by the state Department of Transportation, contended that general excise tax receipts that are dedicated to the rail system are likely to be almost a third lower than forecast by the project's current financial plan.
It said the project is likely to require more than $1.7 billion in additional capital and operating subsidies from the city over 20 years than is assumed by the financial plan. It also claimed that ridership is likely to be lower than estimated.
HNN: Governor Lingle releases financial report on Honolulu rail
The 135-page report challenges the city's numbers for rail.
Honolulu transportation leaders say the project will cost $5.5 billion.
But according to the findings, Honolulu's financial picture is inaccurate.
$14.5 billion dollars is how much Oahu taxpayers would pitch in over 30 years under the report's worst case scenario. The best case scenario is $9.3 billion.
KHON: New Report on Honolulu's Rail Project Raises Issues
The review highlights over a half-dozen key findings.
At the top of the list - that the project will likely cost $1.7 billion more than what was expected.
"Everything in Hawaii runs over budget, that's just the way things are," says Steve Kitterman, Salt Lake resident. "Yeah, it doesn't sound like a good deal to me."
"I think the original estimates were under estimated on purpose, but I think we have to spend the money to go ahead and build it," says Calvin Date, Waipahu resident.
SA: Train opponents cheer prediction of cost overruns
Prevedouros said the analysis was consistent with the 2009 Federal Transit Authority report prepared by the Dallas consulting firm Jacobs Engineering Group, which placed the estimated cost of Oahu's 20-mile system at $5.29 billion but also indicated that there was a chance that the cost could reach or exceed $8.1 billion.
"(Jacobs) did not have a stake in the game. They were just reporting a number," Prevedouros said. "They're experts in getting it right, and they said there was a high chance of overruns. I would trust them more than I would trust advocates of the project."
Prevedouros said the results of the latest analysis should give lawmakers pause as they consider whether and how rail should proceed.
"They may have to assess more taxes if they want to proceed because the money that was promised by the feds isn't there anymore," he said. "It's a different Congress. This will give them pause. It's a perilous path heading forward."
Cliff Slater, one of the project's most outspoken critics, said the report was more pessimistic than his projections of general excise tax collections but is more optimistic than he is that federal money will be available.
Slater said he was impressed with the depth of the study and was encouraged by how closely it reflected what he and other rail foes have said for years.
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CB: Carlisle dismissive
"It's sitting on his desk, unopened, while he's in a parade," said Jim Fulton, the mayor's executive assistant. "That's our official comment."