New Plan: Rail Operating Costs Down, Honolulu Transportation Costs Up
Two years ago, Honolulu estimated it would cost $1.38 billion to fully operate its rail line for the first decade.
Now, with a bid accepted for the bulk of operations and maintenance costs, the number is actually smaller, by $50 million.
The city Wednesday released a new financial plan based on a proposal from Ansaldo Honolulu to run the 20-mile rail line.
Operation of the system will be funded partially by fares — between 27 and 33 percent — with the balance subsidized by Honolulu residents. The rest of the money will come from taxpayers via the city’s general fund.
The savings from the Ansaldo proposal would reduce rail operating costs marginally, but the overall transportation subsidy is now projected to be some $650 million higher than previous estimates. The new total of $5.39 billion ($269 million per year) is up from $4.73 billion over 20 years (an average of $236 million per year) in the 2009 financial plan.
The rail figure includes Ansaldo’s “core systems” contract proposal that will cover the operation and maintenance of the rail cars as well as other costs to be borne by the Honolulu Authority for Rapid Transportation (HART), including inspecting and maintaining the fixed guideway, security patrols, fare collection equipment and servicing and station maintenance.
“After adjusting the proposal for inflation, adding cost not related to the Core Systems proposal such as the HART operating budget, and comparing it to the 2009 Financial Plan report, we found the Ansaldo’s proposal for O&M through 2030 is slightly less than the 2009 estimate,” Toru Hamayasu, the city’s chief rail planner, told Civil Beat in an email just minutes before the new financial plan was released.
Losing bidders have warned that Ansaldo created short-term savings by back-loading its offer in a way that would leave Honolulu taxpayers holding the bag at the end of the day. But even if true, Ansaldo’s operations and maintenance plan represents a savings versus the city’s previous estimates.
(View the and the released Wednesday.)
The construction of the rail project — now projected to cost $5.3 billion, down from $5.5 billion — will largely be covered by a 0.5-percent general excise tax surcharge and federal funding. But the GET is scheduled to sunset and the city will have to find another way to pay for operations.
The operating hike is a result of two big changes to estimates: a $468 million increase in the cost of operating TheHandi-Van and a $295 million decrease in bus and train fare revenues. Hamayasu said that the city’s ridership projection has not changed, but that a lower inflation rate than previously expected will cut into the revenue generated from that ridership. (Read a related story about TheHandi-Van costs.)
“People are paying less per ride because of less inflation,” he said. “When you’re projecting for like 20 years, a fraction of a percent makes a big difference.”
Asked what he would say to the City Council or a taxpayer who asked him how the city should pay for the operation of the transit system for the next two decades, Hamayasu said, “I think that’s a question for the City Council.”
