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The Honolulu Advertiser
Posted on: Sunday, February 17, 2008

Hawaii rail project may create 9,100 jobs

 •  Housing, health centers near stations could get tax breaks
StoryChat: Comment on this story

By Sean Hao
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

This artist's rendering shows how an elevated transit guideway might appear routed down the middle of Kamehameha Highway next to the Pearl Highlands Center. The $3.7 billion commuter rail project is expected to bring an average 9,100 jobs during the nine years it will take to build it.

Advertiser library photo

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CAPITAL COSTS OF TRANSIT

(in 2006 dollars)

$1,805 million

Estimated construction cost

$480 million

Design/construction contingency

$70 million

Right-of-way acquisition

$230 million

Vehicles

$685 million

Professional services (engineering, management, etc.)

$200 million

Project reserve

$250 million

Interest costs

$3.72 billion

Total cost

Source: City & County of Honolulu

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Honolulu's $3.7 billion commuter rail project could generate an average of 9,100 jobs during the nine years it takes to build it.

Those direct and indirect jobs could provide a boost to Honolulu's economy and the construction sector in particular between 2009 and 2017.

The project's massive scale, Hawai'i's low jobless rate and the specialty skills required to build the rail transit system may result in an influx of workers from the Mainland.

The increased demand for construction workers and materials could also temporarily drive up commercial and residential building costs.

These are some of the findings in a preliminary economic analysis of the transit system by the project's main consultant, New York-based Parsons Brinckerhoff.

Somewhere between a third and a half of the job gains would likely be in construction. Those 3,000 to 4,500 positions would add to the 38,000 construction jobs currently in the state.

"There will be literally thousands of construction workers on the job for its duration, and that multiplies through the community," said Mark Scheibe, deputy project manager for consultant Parsons Brinckerhoff.

Parsons Brinckerhoff has a 2 1/2 year, $86 million consulting contract with the city for planning the transit system. The economic analysis was included in a May 2007 report to the city.

At least one economist doubts the job projections of Parsons Brinckerhoff. Currently the city expects to spend an average of about $400 million a year on the project over a nine-year span. That's unlikely to produce the projected 9,000-plus jobs, said University of Hawai'i economics professor Carl Bonham.

Bonham, who did not offer an alternative estimate of the number of jobs the project will create, said the transit system will boost construction and the economy.

"That's roughly the equivalent of building a major resort or a Trump Tower each year," he said. "It helps because it is keeping people at work. It's a stabilizing force."

The activity generated by the transit project could occur at an opportune time for Hawai'i, which is expected to see economic activity flatten out in future years.

"There's an expectation that the economy won't be in as robust an operating condition for the remainder of the decade and indeed could linger at slightly lower rates of growth and vitality on out to something like 2012," said Paul Brewbaker, chief economist at Bank of Hawaii. "Activity that falls out of the sky, so to speak, would be more welcome in an environment of that sort."

Mayor Mufi Hannemann says he wants to break ground on the mass-transit system late next year with the first segment starting service between east Kapolei and Waipahu in 2012. The full 20-mile route from east Kapolei to Ala Moana Center would begin service in 2017, according to city plans.

The transit system is not expected to improve traffic conditions. Rather, the project is aimed at giving commuters another option and accommodating growth in the H-1 corridor.

The transit project, which is expected to be the largest public-works project in state history, will likely provide an economic boost both during the construction phase and once operating, especially in the 19 communities that will host transit stations.

To be sure, the economic impact of the construction jobs will be created by essentially transferring revenues from households to construction. That's because about $3 billion of the project's price tag will be funded by a half-percentage point increase in O'ahu's general excise tax. Another $700 million of project funds are expected to come from the federal government.

TECHNOLOGY OPTIONS

Economists and city officials said it's too early to determine the economic impact of the project beyond the construction phase. Parsons Brinckerhoff eventually plans to conduct a more thorough cost-benefit analysis of the project.

The city is considering four technology options for the transit system: steel wheels on a steel rail; rubber tires on concrete; monorail technology; and a magnetic levitation system. All four use what is known as a fixed guideway, or track, as opposed to a system that runs on existing roads.

"Now that we have the selected (the fixed guideway) alternative, we're really able to hone in at a greater level of detail on both the positive and negative impacts" of the rail project, Scheibe said.

Potential negative economic impacts, identified by Parsons Brinckerhoff and others, include:

  • Higher cost of living from the increase in the excise tax.

  • Traffic interruptions due to construction.

  • Restrictions in access to residences and businesses adjacent to construction.

  • The loss of jobs due to displacement of business and residential users for transit right of way.

    Potential positive economic impacts include:

  • Direct and indirect job creation based on construction spending.

  • Development near transit stations.

  • Reduction of mass transit travel times.

  • Reduced automobile usage and lower parking requirements.

  • Environmental benefits such as reduced emissions.

    Among all the potential positive economic impacts, the most immediate would be the construction jobs.

    The number of jobs created is expected to vary during the construction process. So far there is no estimate for the wages of jobs created by the project. However, the average construction wage in Honolulu in 2006 was $58,657, according to the Department of Labor and Industrial Relations. Between half and two-thirds of the transit jobs would be jobs spurred by construction worker spending.

    NEW JOBS OPENING

    Just how many of those new jobs will be filled by local workers remains to be seen.

    "We do anticipate some Mainland guys coming down, but not much," said Gino Soquena, business representative for Operating Engineers Local 3, the construction equipment operators' union. "We'll get our share of guys out there working also."

    Soquena said the transit system will help if economic growth is otherwise on the decline.

    "If it's slow everywhere else, then that's going to be keeping who we have now working," he said.

    It's not unusual for Hawai'i to import specialized tradespeople, Brewbaker said. However, Brewbaker downplayed the potential problem of a lack of available labor.

    As economic growth slows, "those (labor) resources will be increasingly available not increasingly in shortage," Brewbaker said. "People can and will change jobs when the wages make it worthwhile. There's a tremendous amount of substitutability in the workforce, which will mitigate the problems."

    On the issue of business displacements during construction and the related job losses, Parsons Brinckerhoff noted that those lost jobs are expected to be offset by new development projects near transit stations.

    WALKABLE COMMUNITY

    The idea is for rail stations to become hubs for housing, retail and employment within a so-called "walkable" community. The lifeblood of these communities would be the elevated transit system capable of moving up to 9,000 passengers per hour per direction with trains running from 4 a.m. to midnight, according to design specifications.

    Ultimately the success of the transit project will be determined by a myriad of economic and social factors that occur well after construction is completed.

    "It's not going to have a huge impact on congestion, but it could have a huge impact on quality of life if you do the (transit oriented development) correctly and you build up these centers of population growth around the train," Bonham said. "That will potentially overwhelm even the outlay for building the train. This potentially is just the beginning of the impact."

    Reach Sean Hao at shao@honoluluadvertiser.com.

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