RAIL EXPENSES
Plan to pay millions for Honolulu rail's operation, maintenance still unclear
| • | Lingle supports putting rail on ballot |
By Sean Hao
Advertiser Staff Writer
|
||
 |
|
|
Much of the debate over Honolulu's proposed elevated commuter rail line has focused on how much it costs to build.
The $3.7 billion price tag, or $5 billion when adjusted for inflation, has been widely reported.
What has received less attention is that the train will cost about $1 billion — when adjusted for inflation — to operate and maintain during its first 11 years of full service and several hundred million dollars more in the seven years leading up to full service.
Full service is to begin in 2018, when the 20-mile line from East Kapolei to Ala Moana is complete. The train is scheduled to begin limited operations between East Kapolei and Waipahu or Leeward Community College in 2012.
It's unclear how the city will cover the hundreds of millions of dollars more that will be needed to run the train during its first seven years of limited operations. That hole in the project's operating budget will be filled as financial plans are refined, according to the city.
The lack of a firm financial plan has fueled concerns the city may not be able to afford to operate and maintain the system once it is built.
Both current Hawai'i Gov. Linda Lingle and former Gov. Ben Cayetano in recent weeks have expressed concerns about what happens if the train project runs out of money.
The train, which would be the largest public works project in Hawai'i history, will be built in a state that has a spotty record for maintaining public facilities.
TAXPAYERS SUFFER
The inability of the state and city to budget for maintenance has ended up costing taxpayers more on previous large projects, said Lowell Kalapa, president of the nonprofit Tax Foundation of Hawai'i. Maintenance of the train could follow a similar pattern, Kalapa said.
"They waited so long because they were unwilling to come up with the money," Kalapa said. "It costs even more now because it's now major repairs as opposed to daily repairs. That's what's going to happen to the train."
The list of public facilities with big maintenance backlog bills includes:
If the city can't keep up with train costs, Honolulu could join Mainland cities with big maintenance backlogs. Rail systems in Boston, New York, and Chicago have billions of dollars in maintenance backlogs, according to various media reports. Similarly, relatively new rail systems in San Francisco and Washington, D.C., also face major shortfalls in meeting future capital needs.
'WE'VE GOT TO LEARN'
The city can't afford to repeat past mistakes with the new train system, said City Council member Todd Apo.
"It's going to take the kind of attention these other things should have had," said Apo, chair of the council's budget committee. "I think the problems that we're having are because capital improvements were deferred. We're seeing it with our water system. We're seeing it with our sewer system. It's costing our taxpayers more today than it should have. We've got to learn from that," said Apo, who supports the rail project.
Operating and maintaining the full, 20-mile rail line for the first 11 years — 2019 to 2030 — will cost an inflation-adjusted $1.07 billion, according to the city's financial feasibility report. In addition, the city plans to set aside $62 million for use on repair and replacement needs in 2030 and beyond. The biggest maintenance costs will come after the first 20 years of operations.
The city's financial feasibility report, released in November 2006, does not account for a change in plans to start limited operations between East Kapolei and Waipahu or Leeward Community College in 2012.
The city isn't ready to release an updated financial plan that accounts for that funding gap, said Michael Schneider, managing partner for InfraConsult LLC, which is helping the city manage the massive project.
"I know the numbers are getting closer," he said. "They don't really want to release them until they know the numbers are right."
TRAIN CHEAPER THAN BUS
Regardless of what the final numbers are on the operating costs, one thing for sure, Schneider said, is it will cost a lot less to move people by train than by bus.
"There is no way that running buses can be less cost intensive than running rail," Schneider said. "That's borne out in place after place after place everywhere around the world."
Money to build the train system is expected to come from federal grants and a half-percentage-point surcharge added to the state general excise tax. However, that surcharge, which is expected to raise $3 billion, is set to expire in 2022.
Money to pay ongoing train-related costs will come primarily from diverting more city general and transportation funds to transit. The system also will rely on added federal funds available for rail maintenance and on farebox revenues. Those and other sources should be sufficient to pay future train system rehabilitation and replacement needs, according to the city. Increased fares, user fees or local taxes could help fund budget shortfalls, according to the city's Alternatives Analysis report.
Honolulu's operating and maintenance cost estimates for rail are based on actual costs experienced at a light rail system run by the Regional Transit District in Sacramento, Calif. Those costs were then adjusted to account for an elevated train operating in Honolulu's higher-cost environment.
INCREASE IN TAXES?
If either the project's construction cost or operating and maintenance costs exceed projections, the added burden would fall on local taxpayers, said City Council member Charles Djou, who opposes the rail project.
"It'll have to come from a dramatic — and I mean really dramatic — increase in the property tax, or the city will have to go back to the Legislature and ask for what the mayor originally asked for and that's a full 1 percent increase in the general excise tax, instead of the half percent increase in the general excise tax," Djou said.
The Tax Foundation's Kalapa doubted the state would be willing to bail out the city.
"I don't think that's going to happen," he said. "If the state continues to hobble along and we don't have an (economic) resurgence ... the political environment is not going to support an extension. The needs of the state are going to outweigh, I think, an extension of the (general excise) tax" beyond 2022, Kalapa said.
InfraConsult's Schneider said it's premature to consider additional taxes for Honolulu transit. That's because rising fuel costs will help spur major changes in the way public transit is funded during the next decade, he said.
"Perhaps a vastly improved transportation system may in the future require there to be some investments in how the costs of its operations are dealt with," he said. However, "I think the way we are going to be doing transportation on a national basis will change dramatically before we worry about increasing any property tax or excise tax in Honolulu or any other city."
Reach Sean Hao at shao@honoluluadvertiser.com.
