Mufi’s Plan for Rail Without Raising Real Property Taxes
In 2005, I shared a dream of a mass transit system to provide residents, mired in worsening traffic congestion, with more transportation choices that would also address the environmental and energy concerns of the future. Voters had several opportunities to voice their support for the project and on each occasion the majority did so. There have been many obstacles and missteps in pursuing this dream, including ballooning construction costs and now the economic crisis caused by the pandemic. The times require us to be bold and creative, but also fiscally responsible and realistic. Rail is the key to sustainability—preserving the environment, offering economic vitality, and most importantly, contributing to our quality of life—but it must also make business sense. That is the immediate challenge before us, one that we must solve so we can ensure a modern, resilient future for our island community.
The COVID pandemic has devastated our economy. If elected, Mufi pledges to construct rail without raising real property taxes, which would further burden residents and businesses. This will honor a commitment he made as mayor, but which has not been followed by his successors.
Mufi will hold true to a policy of fiscal discipline and responsible spending that distinguished his past mayoral tenure, and earned the City upgrades from no less than three bond-rating agencies.
Mufi’s plan to fund the construction of rail entails:
Urging the Federal Transit Administration to release previously approved and allocated funds for rail.
Seeking and securing other federal sources of infrastructure support, such as through the pandemic economic stimulus appropriations, as well as future opportunities for federal aid.
Placing the highest priority on partnering with private sector investors and developers along the rail route, to provide public benefits by having them contribute to elements of the transit line and the cost of rail.
While Hawai‘i’s current economic struggles may cause some temporary delays and pauses, Mufi’s course of action will enable the City to complete rail in a fiscally responsible manner and within available financial resources.
More specifically, if all of the aforementioned funding options are insufficient to continue to pay for the construction of rail, he will suggest to HART that we pause the project momentarily and look closely at deferring elements of rail until funding sources are identified.
Rail: Just the Facts
Rail costs were estimated at $5.12 billion when Mufi left office in 2010. The project was on time, on budget, and enjoyed a hefty contingency fund.
He has been out of office for 10 years.
Subsequent increases of up to $9 billion occurred during the tenure of the current mayor; while his appointee, Colleen Hanabusa was a HART board member and later its chair; and when Kymberly Pine was a City Council member, voting on rail funding issues.
During this period, Mufi had no influence or control over HART policies or costs.
The Hannemann administration awarded its only rail construction contract in 2009 to take advantage of favorable estimates during the recession of 2008 and provide much-needed economic stimulus. Since awarding that one contract, approximately 200 rail construction and professional services contracts have been approved by others.
After leaving office in July 2010, an audit by the State’s Procurement Office found no basis to the charges by former Governor Cayetano and others that the state’s procurement code had been violated during Mufi’s tenure.
There have been five CEOs for HART in the last 10 years—a formula for disaster. Anyone knows that turnover at the top leads to inefficiencies and a waste of money.
Attempts to halt the project at Middle Street would cause the City to be in default of an agreement with the Federal Transit Administration, and result in billions of dollars needed to repay the FTA at time when City revenues are plunging.
There are trillion-dollar stimulus packages being proposed by Congress and the Trump administration for infrastructure, which could include funding for rail projects.
The Honolulu economy is in freefall as a result of the pandemic. Rail construction is not only shovel-ready, but is ongoing. This provides the construction industry a boost at a time, like in 2008-2009, that it is severely needed.
At the same time, transit-oriented development will create opportunities for affordable housing and businesses and enterprises along the rail route and add needed revenues to the City through higher property values, like in the redevelopment of Ala Moana-Kaka‘ako. This includes the revitalization of Kalihi and other neighborhoods.
The state housing authority has plans to construct 10,000 rental units within walking distance of the rail line. The Navy has announced a major development project linked to the Pearl Harbor/Hickam station.
The Aloha Stadium revitalization project is projected to be well underway by 2023 and has brought to fruition a public-private partnership to develop this long-awaited project.
A 2018 estimate projects a ground lease revenue potential of $97 million from HART-acquired sites and $183 million from City-owned sites for a total of $280 million.
Ancillary revenue potential of $68 million in advertising revenue, $57 million in parking revenue, and $16 million from concessions for a total of $141 million was also projected.
Rail will be our largest electrical vehicle, having a positive impact on our environment. It promotes an eco-friendly energy future for Hawai‘i as clean, renewable energy is increasingly added to the grid. Rail will eventually eliminate 40,000 car trips a day, reduce our reliance on imported oil and lower carbon emissions.