HONOLULU — The Honolulu rail transit project’s top official said Thursday that the federal government is anxious for more details on how the city plans to pay for its partially built $8.2 billion rail line.
The project faces a funding shortfall of up to $3 billion, and the state Legislature ended its last session without agreeing on whom to tax to fund the project.
“They want to know, make sure that we have a financial plan that is acceptable to them,” said Krishniah Murthy, interim executive director and CEO of the Honolulu Authority for Rapid Transportation.
Transit officials submitted a financial recovery plan to the Federal Transit Authority in late April that included ways the project could save money and possible alternative routes.
But without the state’s approval for a plan to raise taxes to fund the project, they could not tell federal officials how they would cover the full cost of the project.
“A big piece of it is missing for them, and they want to see that,” Murthy said.
Murthy and the rail project’s board discussed how the project will run out of money in January without an influx of cash.
Board members debated asking the Honolulu City Council for permission to issue up to $350 million in bonds. The influx of cash from those potential bonds would last through the end of June 2018, said Robert Yu, chief financial officer.
But some board members said they should consider issuing up to $2 billion in bonds instead.
“Clearly our needs are going to exceed $350 million over the course of the project,” said board member Colbert Matsumoto.
Yu said issuing $2 billion in bonds could significantly impact the city’s credit rating.
The board decided to discuss the issue further in its finance committee.
If approved, it would be the first time HART asks to issue bonds, Yu said. There was previously enough money in the coffers from revenues from the general excise tax, in part because lawsuits delayed construction by 13 months, and money was accumulating from tax revenues, Yu said.
The federal government has committed $1.5 billion to construction of the rail, but had asked HART to submit a financial recovery plan. Absent a reasonable financial plan, the federal government could ask Honolulu to return approximately $722 million in federal funds already spent.
When financing costs are included, cost estimates for the rail project range up to $10 billion.