Federal authorities seem receptive to ending rail challenge in Kakaako

HONOLULU (HawaiiNewsNow) – A plan to pause rail construction at South Street rather than building to Ala Moana Center could be gaining traction with the federal government.

Lori Kahikina, CEO of the Honolulu Authority for Rapid Transportation, said she received a letter in December from Federal Transit Administration officials saying they were open to amending the Full Funding Grant Agreement, which calls for the rail to build 21 stations and 20 miles of guideway.

“This is unprecedented,” she said. “I believe … this has only happened once before ― Puerto Rico.”

But the FTA is still worried that HART might run out of money before it even gets to South Street.

“They’re very worried about inflationary costs that are happening right now because of the Ukraine and Russian war,” Kahikina said.

Inflation not only increases the cost of building materials and labor but it also could increase what it costs HART to borrow money.

HART and the city are finalizing a recovery plan that includes the shortened route. The FTA has to approve the plan before it releases the remaining $744 million it has promised for the project.

“Maybe there’s an extension of the (general excise tax) and (transient accommodation tax). Right now, it sunsets in 2030. Maybe we can extend it,” Kahikina said.

But HART board member Natalie Iwasa believes there’s little appetite in the state Legislature to extend the general excise or any other tax for rail.

“There is this idea out there that we can tax our tourists. But they’re already now at 13.5% ― plus the 4.5% on the GET,” she said. “You come to a point where the tourists …. are not going to want to pay that amount either.”