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Honolulu Rail Project’s Delays and Rising Costs Should Be Cautionary Tale for Cities and Congress

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With Senate Republicans proposing a $1 trillion infrastructure bill as a counteroffer to President Biden’s nearly $2 trillion infrastructure plan, federal and local officials should look back at previous spending initiatives to see how ambitious infrastructure projects, particularly mass transit projects, have performed in comparison to their expected costs and ridership levels. 

In the case of the Honolulu Authority for Rapid Transit (HART), taxpayers have yet to see any benefit for their sizeable investment in the construction of a new 20-mile rail system that commenced during the Obama administration.

In 2012, the Federal Transit Administration authorized $1.8 billion of federal grants for the Honolulu rail project, which was then expected to cost $5.1 billion.  The remainder of the costs were to be funded by a 0.5% sales tax surcharge on purchases in the city and county of Honolulu, which cover all of the islands of Oahu.

The system was expected to be operating by January 2020 and the average weekday ridership was projected to reach 116,300 by 2030. Since construction began, however, the rail project has been beset by delays, cost overruns, and understandable public criticism.

In March of 2021, HART management forecast overall project costs of $12.4 billion (including $1 billion for debt service) and that revenue service along the entire 20-mile line would start in 2031. If these new forecasts are correct, costs will have more than doubled since project inception. Even with the addition of a new revenue source, a 1% transient occupancy tax on hotel stays throughout Hawaii, the project may not have enough state and local revenue to reach completion. Honolulu’s mayor is asking Congress for an extra $800 million to partially fill the funding gap.

As of March, Honolulu Authority for Rapid Transit management was still hoping to begin offering service on the system’s first phase by the end of 2021. While this 10.8-mile segment accounts for most of the final system’s length, it connects less populated areas in Honolulu’s eastern suburbs and may not attract substantial ridership unless, and until, HART reaches the airport (in phase 2) and downtown (as part of phase 3).

Further, the first phase’s opening date is currently threatened by the need to remediate construction defects. During testing, HART discovered that wheels on its Hitachi train cars were not wide enough to move through track crossings at full speed. Either the wheels or the track will have to be fixed before service can begin. HART may also need to address some substandard welding work, which has already caused switch plates along the line to lose their protective silicone coating.

These defect-driven opening delays are reminiscent of similar problems on the mainland. In the California Bay Area, for example, Bay Area Rapid Transit (BART) expansions have been repeatedly delayed by issues uncovered during testing.  San Francisco’s Central Subway remains stuck just short of opening as the city and contractor point fingers over the installation of the wrong type of rail as well as other construction issues. Similarly, In Washington, DC, the Metro’s Silver Line extension to Dulles Airport has faced repeated delays during system inspection and testing.

Hawaiians are increasingly frustrated by the rising costs and delays. A recent poll conducted by Honolulu Civil Beat and Hawaii News Now shows that 53% of Oahu voters say they oppose the HART project, with just 34% supporting it. When told of cost overruns and proposals to shorten the system, 45% favor canceling one or both of the project’s later phases while 44% want to continue building the system to the Ala Moana shopping center.

Even if the entire line is completed, the aggressive ridership estimates made in 2012 are highly unlikely to be achieved. One problem is that population growth in Oahu has stalled, in part because the high cost of living is driving many people back to the mainland United States. According to Census Bureau figures, Oahu’s population declined 1.8 percent between 2016 and 2019.

Further, officials may have overestimated peoples’ preferences for riding trains compared to other travel modes. Today’s travel environment is far different than that of a decade ago. With more people working from home and avoiding mass transit during the COVID-19 pandemic and beyond, train ridership is likely to be lower in the near future.

“We do have our ridership projections, and they have decreased from when we first started, to after the pandemic, but it’s still high,” Lori Kahikina, chief executive officer for the Honolulu Authority for Rapid Transportation, told Honolulu Civil Beat.

University of Hawaii Civil Engineering Professor Panos Prevedouros recently told Honolulu Civil Beat he has reduced his 2030 weekday ridership forecast for the Honolulu system from 70,000 to 60,000, which is nearly half of the project’s official projection of 119,600. To support his more conservative forecast, Dr. Prevedouros cited declining bus ridership in Honolulu as well as relatively low usage of a peer train system in Puerto Rico.

The Tren Urbano serves San Juan and adjacent Puerto Rico municipalities whose overall population is similar to the urbanized portion of Honolulu. In late 2019, before the COVID-19 pandemic, the average weekday ridership on the system was only 20,300. After closing due to COVID-19 in the summer and fall of 2020, the Puerto Rico transit system’s ridership remains about 70% below pre-pandemic levels.

Admittedly, HART’s route is longer than Tren Urbano’s, so it may be able to attract more riders if and when it is fully built out. But even if we assume that HART will attract at least twice the ridership given that it would be double the length of Tren Urbano, this would still put the estimated average weekday ridership at about 41,000.

If ridership only reaches the levels in Puerto Rico or those forecast by Dr. Prevedouros, the system would face a larger-than-expected operating deficit, resulting in the continued need for county, state, and/or federal funding once the Honolulu rail project is fully operational. In 2018, HART submitted a financial plan to the federal government that projected $127 million of operating costs once the system is fully operational. The plan calls for farebox revenues to cover about 30% of those costs, but that is unlikely if the very optimistic ridership forecast is not achieved.

Like some other projects including the California high-speed rail system, which is also very far behind schedule and dramatically rising in cost; Minneapolis’ NorthStar commuter line which was being heavily subsidized before the pandemic; the Denton Texas A-Train, which loses $23 per rider; and Detroit’s QLine streetcar, which is ” is recovering less than 10 percent of its expenses from fares” according to the Metro Times, the Honolulu rail project is far over budget and seems highly unlikely to provide anywhere near the expected benefits.

Before members of Congress consider funding a new set of ambitious mass transit projects this year, they should build some guardrails to protect taxpayers. For example, they should require rail projects seeking federal money to obtain unbiased ridership forecasts developed or endorsed by uninvolved third parties, which would help reduce the risk of farebox revenue shortfalls and ongoing efforts to obtain more federal funding if rail projects fail to live up to ridership estimates or suffer cost overruns. 

The post Honolulu Rail Project’s Delays and Rising Costs Should Be Cautionary Tale for Cities and Congress appeared first on Reason Foundation.


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