Federal contractors overseeing Honolulu rail believe the transit project’s latest multi-billion-dollar construction budget is short by approximately $250 million, according to City Council leaders.

Local rail officials, meanwhile, remain firm that their $8.16 billion cost estimate is sound. But if they’re unable to convince their partners at the Federal Transit Administration, the city could be forced to find millions of dollars more for rail — on top of the $214 million it must already pay out of its own budget during construction.

The latest red flags over the construction costs, according to multiple sources, are part of an April 10 draft report by Jacobs Engineering — the longtime “project management oversight contractor” that monitors rail for the FTA. The budget concerns stem from Jacobs’ February visit to scrutinize the project in what’s known as a “risk refresh.”

Jacobs’ final report hasn’t been released yet. FTA and Honolulu Authority for Rapid Transportation officials plan to discuss the Jacobs findings later this week, HART Executive Director Andrew Robbins told his agency’s board members on Thursday.

The final report should be released sometime afterward, according to a HART spokesman.

The budget issue also came up at a meeting in Washington, D.C. last week between FTA and city leaders, including Mayor Kirk Caldwell, Council Chairman Ernie Martin, Councilman Trevor Ozawa and Robbins, according to Martin and Ozawa. Sen. Brian Schatz also attended.

A joint statement released after that meeting by Caldwell, Martin and Ozawa did not mention the cost discrepancy. By Thursday, there were rumblings among sources familiar with the project that city leaders might seek more revenue for rail.

Nick Grube/Civil Beat

On Monday – almost exactly a week after the FTA meeting – Ozawa, Martin and the HART board’s vice-chairman, Terrence Lee, all met with state House Speaker Scott Saiki in his state Capitol building office. Rep. Sylvia Luke, the House’s Finance Chairwoman, attended part of the meeting.

The burgeoning issue over budget costs, the draft risk refresh report and the FTA did not come up at the meeting with Saiki because Jacobs’ findings are “premature,” according to Martin.

Instead, they discussed the $44 million that the city has to cover for rail next year and whether Saiki and state leaders consider any of those costs to be capital expenses under the $2.4 billion bailout package they passed last year. The city is seeking the best way to cover its new rail costs and the council wants to get it right the first year, Ozawa said.

Martin said the group on Monday further discussed State Auditor Les Kondo’s declaration that the rail project may not be eligible for full payment from the special fund set up under the bailout package. That could raise more problems for rail, and require state leaders to refine the intent of Act 1, depending on how much money it involves.

Uh-oh: @hawaiiauditor Les Kondo tells the Honolulu rail board this AM: "I don't think we're on the same page" (with comptroller) over what costs are reimbursable to @HNL_RTD. — Marcel Honore (@marcelhonore) April 19, 2018

Meanwhile, if the city fails to appease the FTA’s concerns, the agency could withhold rail’s remaining $744 million in federal funding. That would raise even more problems for the project. The agency is reviewing HART’s “recovery plan,” which features the city’s funding strategy to complete the project amid skyrocketing costs in recent years.

Robbins and HART believe that they can close the $250 million gap with Jacobs and the FTA by at least $170 million, according to Martin.

Robbins wasn’t immediately available for comment Monday. At Thursday’s HART board meeting, however, he was upbeat about the local rail agency’s current relationship with the FTA.

In Washington, D.C. “both parties committed … to working collaboratively together to come to a meeting of the minds on the conclusions of that risk refresh and on any actions that we need to take collectively,” Robbins told the HART board.

“What was expressed by FTA, and I would think DOT as well, is that … they would be in a very strong position to recommend approval of the Recovery Plan and allow the money to start flowing again,” Robbins added. “So that’s, of course, our ultimate objective. So we’ll be working very diligently on that.”

FTA officials didn’t respond directly to questions of whether they’re concerned over rail’s budget – or whether approval of the recovery plan could be in jeopardy. In a statement Monday, the federal agency said that local rail officials have several more days “to provide any technical corrections or comments on the report before it is finalized.”

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