HART reveals cost containment strategy; opens bids for first package of station contracts

Written by Jenifer Nunez, assistant editor

The Honolulu Authority for Rapid Transportation (HART) is taking several steps to reduce costs and explore new revenue sources in an effort to address what it sees as financial challenges ahead.

 

“We want to be transparent and let the public know early on what some of our financial challenges are,” said HART Executive Director and Chief Executive Officer Dan Grabauskas. “For the first time in recent months, several factors have come together to create a new fiscal landscape. Legal and delay costs have had a cumulative effect and pushed us into a more competitive construction market resulting in bids coming in significantly higher. To meet these challenges, we are repackaging and recalibrating our contract solicitations to further reduce scope and costs. We are also looking at additional sources of revenue, including public-private partnerships and other financing options.”

Nearly 60 percent of the project’s contracts were issued in a favorable market, resulting in those contracts coming in under budget. The remaining 40 percent will prove more challenging because of the heated construction market, Grabauskas noted.

Federal funding for the project remains strong and HART has received $806 million of its $1.55-billion grant, with another $250-million installment agreed to by Congress.

In addition, the project has received $1.3-billion of its projected General Excise and Use Tax (GET) surcharge revenue. GET receipts are currently running thrree percent short of projections, or $41 million behind.

HART is looking at several ways to generate cost savings and yield additional revenue, including: taking advantage of lower interest rates through an improved borrowing plan to save $60 million-$75 million; leverage transit-oriented development opportunities to generate revenue; seek additional public-private partnerships to share costs and leverage resources on key project components, such as parking facilities and begin the discussion now of extending the existing half-percent GET surcharge that currently provides about 70 percent of the project’s revenue.

“Rail is an essential part of our public transportation system and is critical to West Oahu and to the island’s overall future,” said Honolulu Mayor Kirk Caldwell. “Honolulu is consistently ranked either first or second in terms of having some of the worst traffic congestion in the United States. For the sake of our residents, our visitors and our economic future, it is time to change that. Rail will give residents an option to get out of the crippling traffic, so they can be more productive at work and spend more time with their loved ones.”

In other HART news, the agency put out solicitations for the first of three rail station packages for the transit project, implementing its action plan to control costs and find additional revenue sources.

A request for bids was issued for the Farrington Highway Station Group Package consisting of the West Loch, Waipahu Transit Center and Leeward Community College stations. Bids for the Farrington Highway Station Group contract are scheduled to be opened in March 2015, with the contractor selected later this spring.

HART earlier this year had canceled solicitations for the Westside station contract package consisting of the first nine stations along the rail route after bids came in 63 percent higher that anticipated. The bid was repackaged and recalibrated as part of the agency’s overall plan to reduce costs and find additional revenue sources. Solicitations for the next two station groups in West Oahu and along Kamehameha Highway in Pearl City and Aiea are scheduled to be issued in spring 2015.

“With this first solicitation for the Westside stations issued today, we are off to a solid start,” Grabauskas said. “We know that due to delays and lawsuits, we are now in a heated construction market. We are re-working the designs and changing the packaging of our remaining solicitations. We are also exploring additional revenue sources now rather than just waiting for the actual bid numbers.”

 

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