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Rail transit could cost less than projected


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POSTED: Monday, August 31, 2009

Proposals for the first phase of the rail transit project appear to be below budget estimates, forecasting a possible savings of hundreds of millions when the $5 billion system is completed.

“;We're in good shape,”; Mayor Mufi Hannemann said yesterday at a news conference.

State figures, however, show the city has been falling short about $80 million a year in revenues for the project since the surcharge began in 2007.

Friday was the deadline for proposals from contractors vying for the job of building a 6.5-mile elevated guideway from Kapolei to Pearl Highlands.

Hannemann said state procurement laws restrict him from releasing specifics until a final selection is made in October. But he did say that an analysis of the proposals shows the cost seems to be matching a national trend of public transportation bids coming in at 10 to 25 percent below budget.

The first phase refers to the raised guideway between Kapolei and Pearl Highlands—not including stations, vehicles or base yards—of the 20-mile route. This phase was expected to cost $550 million to $600 million, said city spokesman Bill Brennan.

When a proposal is selected, “;it will verify what I am saying today, and it will come in under budget,”; Hannemann said, adding that the entire project could be several hundred million dollars below budget.

“;That doesn't surprise me,”; said Cliff Slater, chairman of honolulutraffic.com, a group that opposes the rail transit project. “;Construction is very competitive right now.”;

But the savings will not make up for a decrease in income from declining tax revenues, he said. A half-percent increase in Oahu's general excise tax on Oahu for 16 years is projected to pay for most of the project.

Slater said according to documents he has received in a request for public information from the federal government, the city's decrease in tax revenues will leave the entire project short by $953 million.

Hannemann said opponents who claim the rail project is not fiscally sound are relying on an outdated city report to the Federal Transit Administration. He said construction of the project will pump $200 million into the economy next year, boosting tax revenues and creating jobs.

Slater said if the city had submitted a subsequent document, “;then fine, let's see it. The only thing we have to go on is what the city submitted to the FTA on June 16.”;