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In an abrupt turnaround, Honolulu Mayor Kirk Caldwell said Thursday he supports cutting the city’s rail line nearly five miles short and stopping the elevated guideway at Middle Street in light of an estimated $1.5 billion budget shortfall and pressure from the feds.

Caldwell announced at a board public hearing that he and City Council Chair Ernie Martin agree that the city should stop construction at Middle Street.

The mayor said he still supports eventually building the rail line to Ala Moana Center, its original destination, as well as extending it to the University of Hawaii Manoa.

Still, Caldwell ’s endorsement of stopping rail at Middle Street — even just for now — is significant. The mayor has of the importance of building rail to Ala Moana Center and won his mayoral seat in 2012 on a campaign promise to “build rail better.”

But a lot has changed in four years. The combination of rising construction costs, lawsuits and poor fiscal management — among other factors — has resulted in a project that’s now about 60 percent over its original budget.

While it’s not unusual for rail projects across the nation to run over-budget, the average cost overruns for 38 U.S. public transit projects surveyed by the Federal Transit Administration in 2011 was 37.5 percent. Only 10 of those projects exceeded original estimates by more than 60 percent.

“Let’s do a good job for the first 15 miles and then we can talk about the rest later.” — Mayor Kirk Caldwell

The option of building the entire 21-station, 20-mile rail line, originally estimated to cost $5.2 billion and be completed in 2019, is now estimated at $8.3 billion with completion in 2024. HART officials had recently said they estimated the rail project would cost about $8 billion, but that didn’t include $300 million for debt service.

The FTA, which provided $1.55 billion for the project, wants Honolulu to submit a “recovery plan” by Aug. 7 explaining how it’s going to complete the project within its current budget of $6.8 billion.

The FTA has the authority to demand payback of money awarded to Honolulu if the city doesn’t come up with an acceptable alternative.

Martin sent a letter to the FTA on Tuesday in which he urged the HART board to endorse a proposal to end rail construction at Middle Street, calling it “a more realistic perspective” than realigning the route, which would require more environmental reviews.

Caldwell sent his own letter to the FTA on Wednesday asking the HART board to “propose accomplishable recommendations” by Aug. 7, but didn’t specify any alternative. But he told board members Thursday that he agrees with Martin and doesn’t think it’s possible to properly vet other options by Aug. 7.

The mayor asked the HART board to formally adopt a recommendation to the City Council to stop rail at Middle Street.

“Let’s do a good job for the first 15 miles and then we can talk about the rest later,” he said.

HART board Chairwoman Colleen Hanabusa said the board could hold a special meeting to consider a recommendation as soon as next week. The City Council would likely hold a public hearing afterward to discuss an official resolution.

Dan Grabauskas, executive director of HART, said the staff is planning to spend the next few weeks evaluating the feasibility of stopping rail at Middle Street and its impact on cost and ridership.

He said it’s possible the FTA could sign off on a new plan by the end of the year, but that’s only if the federal agency decides that the alternative justifies its $1.55 billion investment.

Middle Street Option Has Its Drawbacks

In his letter to the FTA, Martin wrote that “the time has come to deal with absolute values and not depend on consistently unreliable projections, hypotheticals, or better luck to get us through this next challenge.”

“To proceed under such uncertainties would be irresponsible,” he wrote.

But a lot of uncertainty surrounds the cost of stopping rail at Middle Street.

Brennon Morioka, HART’s deputy executive director, said building the guideway to Middle Street could cost an estimated $6.22 billion, including a 15 percent contingency.

But he cautioned Thursday that the price tag is a “real rough estimate.”

It doesn’t include the potential cost of amending contracts related to the last 4.2 miles of the route. It also doesn’t include $300 million in debt service and may exclude about $100 million in rail-related contracts that the city spent prior to the formation of HART.

Morioka said the FTA will likely push HART to increase that contingency to 20 percent, which would add millions to the total cost.

The price tag would also likely rise further to account for the cost of integrating the city bus system with rail, relocating an electric substation that would distribute power to the rail system, and possibly upgrading the Middle Street transit center.

“We won’t ride it because it won’t take us here.” — Councilwoman Kymberly Pine

HART has already spent $49 million acquiring property between Middle Street and Ala Moana, and nearly $55 million paying for design and construction along the rail line and surrounding development.

Stopping at Middle Street would chop off eight rail stations, including those in Chinatown, downtown, Kakaako and Ala Moana, and result in a steep drop in expected ridership.

The full version of the rail project was anticipated to generate 119,600 daily trips. Slashing the final eight stations is expected to cut that by at least 50,000 trips and likely more, Grabauskas said.

Rail passengers from East Kapolei would travel 30 minutes to get to Middle Street, where they would transfer to buses. Getting to Ala Moana Center could take another 49 minutes by bus, according to an estimate by Google Maps.

The extra time and hassle could discourage some people from riding rail, increasing the yet-unknown taxpayer subsidy for rail operating costs.

“We won’t ride it because it won’t take us here,” said Councilwoman Kymberly Pine, testifying before the HART board in downtown Honolulu.

During a City Council Transportation Committee hearing earlier that afternoon, she called the idea of stopping at Middle Street “pretty stupid.”

“As someone who is stuck in traffic the longest and whose constituents will be using this particular system the most in the old plan, I can tell you you need to look at the ridership numbers on all of these plans and then choose which option to go to,” said Pine, who represents constituents in West Oahu.

“We are just making a guess out of the air right now,” she said. “I think that has been the problem with the project from the very beginning is that there is just so much assumption after assumption after assumption, and we’re not using real numbers to make management and construction decisions.”

Political Ramifications

The rail project upheaval could not come at a worse time for Caldwell, who wants Oahu voters to re-elect him this year.

The mayor declined to take questions from the news media after he addressed the HART board, explaining that he needed to attend another press conference where he would be receiving a campaign endorsement.

But any boost from the endorsement of the International Union of Painters and Allied Trades was overshadowed Thursday by the latest rail developments and criticism from Caldwell’s political rivals.

“It isn’t the vision of somebody who knows where they’re going. It’s the vision of somebody who wants to get re-elected.” — Peter Carlisle

“It’s absolutely essential that we finish doing what we started,” said former Mayor Peter Carlisle, a staunch supporter of building rail to Ala Moana Center who is running against Caldwell.

The former city prosecutor called the mayor’s idea of stopping at Middle Street “particularly unwise” and “exceedingly incomprehensible.”

“It isn’t the vision of somebody who knows where they’re going,” Carlisle said. “It’s the vision of somebody who wants to get re-elected.”

Charles Djou, a Republican and former congressman who is also running for mayor, has promised he would not raise taxes again for rail.

Hours before Caldwell’s announcement Thursday, Djou said he was “open to any reasonable alternatives, including the so-called Middle Street alternative.”

But he still found fault with the mayor’s embracing of the option and said it points to a bigger problem of lack of trust in government.

“You cannot trust this administration — not with ethics, not with rail, not with anything,” Djou said. “And today’s flip-flop on Ala Moana versus Middle Street is just one more illustration of how Kirk Caldwell is nothing more than a typical politician that says one thing and does another.”

Caldwell said in a press release that he is “totally committed to getting to Ala Moana and ultimately to UH Manoa.”

“I wish we could continue all the way to Ala Moana now, but that is a challenge that cannot be addressed until additional funding becomes available,” he said.

Chad Blair and Bob Porterfield contributed to this report.