HONOLULU — Honolulu’s financially troubled rail transit project will be able to issue bonds to keep it afloat through the end of the year — a move that rail officials said was critical to keep construction from stopping.
HONOLULU — Honolulu’s financially troubled rail transit project will be able to issue bonds to keep it afloat through the end of the year — a move that rail officials said was critical to keep construction from stopping.
The City Council approved a bill Wednesday to allow the Honolulu Authority for Rapid Transportation to issue the bonds.
Rail officials said the project would run out of money in January without a cash infusion, and without the bonds it would have to begin shutting down operations this August.
The project, with cost estimates up to $10 billion, faces a funding shortfall of as much as $3 billion after the Legislature ended its session without agreeing on a way to fully fund it. The planned 20-mile, 21-station rail line is intended to alleviate traffic from Oahu’s West side. Honolulu ranks among the worst in the nation for traffic congestion.
The federal government is waiting for the city to explain how it will close the funding gap. If a viable plan isn’t presented soon, the Federal Transit Administration could pull its promised $1.55 billion from the project and demand the return of more than $700 million in federal dollars already spent.
Krishniah Murthy, interim executive director of the project, said he expects to receive a letter from the federal government stating that the rail project isn’t in compliance with the federal funding agreement.
“It is critical because the FTA needs to know it has the support of the council” and that there’s a dedicated funding source, Murthy said.
The bill passed by the City Council does not include a dollar amount, but rail officials say they’ll need about $350 million in bonds to get through the fiscal year.
Critic Natalie Iwasa pushed back on the plan, saying costs have spiraled out of control.
“I think at this point we desperately need accountability,” Iwasa said.
“Who was minding the store? Who was watching the books?” asked Councilwoman Ann Kobayashi, who voted against the proposal.
Bonds issued in the next year would not address the looming long-term shortfall but would solve the short-term problem of supplying cash to enable rail construction to continue.