9

US. Department Administrator 1200 New Jersey Avenue, SE
of Transportation Washington, DC 20590

Federal Transit

Administration  2 

The Honorable Kirk W. Caldwell
Mayor of Honolulu

530 South King Street, Room 300
Honolulu, Hawaii 96813

Dear Mayor Caldwell:

This letter is to follow up on our meeting of November 12 and recent discussions with the
Federal Transit Administration (FTA) Region IX staff. We appreciate the open, transparent and
cooperative efforts from Honolulu Authority for Rail Transportation (HART) staff, particularly
Executive Director and Chief Executive Of?cer Dan Grabauskas, as we work through the
construction cost and schedule challenges that the HART project confronts. We have received,
through our project management oversight contractor, updated information that was requested in
our October 14 letter to HART. We are encouraged that the information provided has
acknowledged the cost and schedule issues. However, there are ?irther analyses and discussions
with HART which must occur and we may need additional information before we can fully
validate a revised cost and schedule.

Approval of the General Excise Tax (GET) extension by the City Council is paramount to
making a ?nding that the ?nancial plan is satisfactory. As we discussed, I am concerned that the
city has not yet completed the actions needed to extend the GET which forms a crucial part of
the ?nancing for the project. As you know, we expect that HART will have in place a ?nancial
plan which shows that the sources of funds committed to the project are suf?cient to cover the
cost of the project. Thus, our ?nding that the revised financial plan for the project is adequate at
this stage of the project will depend on having in place, without the need for further action by
others outside of HART, all of the funding needed to complete the project. The GET is the sole
source of local funds and we undersde that the Hawaii legislature allowed the extension of the
GET only for public transportation. This is the same standard that has been required by FTA
since prior to entering into the Full Funding Grant Agreement (F GA) with HART. 1 would also
note our concern that delay in extending the GET may result in additional cost increases if the
delay interferes with the timely award of construction contracts.

Until FTA has agreed to a revised cost estimate and schedule, and a ?nancial plan which
includes a commitment of all of the local funds needed to cover that cost estimate, FTA cannot
award the Fiscal Year 2015 increment of Section 5309 funds under the terms of the FFGA. We
recognize the challenges the project is now confronting, but FTA must be assured of the
commitment of the revenue needed for the project before we can move forward together.

 

The Honorable Kirk W. Caldwell
Page 2

Again, my thanks for the cooperative efforts by you and by HART. If I can provide further
information and assistance, please contact me directly at (202) 366?4040.

Sincerely yours,
Therese W. McMillan
Acting Administrator