City signs $483M rail contract


POSTED: Wednesday, November 18, 2009

A deal signed yesterday to get the city's $5.3 billion rail project rolling means that the general excise tax money raised for the project is off-limits to state legislators trying to plug Hawaii's $1 billion budget gap, according to Mayor Mufi Hannemann.

At a news conference yesterday, city officials and executives from contractor Kiewit Pacific Co. signed a $483 million contract to build the first 6.5 miles of the 20-mile rail transit system, which would eventually stretch from East Kapolei to Ala Moana Center.

Hannemann said the contract formally encumbers rail transit funds raised from increasing the state general excise tax by half a percentage point on Oahu.

“;Therefore it cannot be shifted or used by anyone for any other purposes,”; he said.

Several legislators have suggested raiding money from the GET increase to help ease the state's money woes.

State House Finance Chairman Marcus Oshiro said he supports the rail project but needs to determine whether the funds are indeed encumbered.

Oshiro said he wants to see whether the state could borrow the money or use it for bond financing to help meet financial shortfalls in the schools, hospitals and services for the aged, blind and disabled.

“;I too have responsibilities. ... We all feel the effect of the current recession,”; he said. “;I need to keep all the options open.”;

But Hannemann is putting the rail on a fast track, even though the environmental impact statement for the project still has not received state and federal approval.

;[Preview]  Oahu Rail Transit Closer To Groundbreaking

The city signed a formal agreement to begin construction on the first 6 miles of its 5.5 Billion Rail Project.

Watch ]


Hannemann said he is hoping to break ground for construction in January, and he has not received any indication there is a problem with the city's environmental impact statement. He said he would emphasize one point to those reviewing the document: “;People want this project and they want it now.”;

State Sen. Colleen Hanabusa said state and federal officials review the environmental impact statement based on law and whether it provides enough information to make a decision and not on politics.

“;It's not wise to belittle a process that's very much a part of our law,”; she said.

Hanabusa said whether one supports or opposes rail, people do not want to be in the same situation as the Hawaii Superferry, a project halted due to the lack of an adequate environmental impact statement.

The Hannemann administration plans to issue a request for proposals today for the second phase — a 3.9-mile project from Pearl Highlands Shopping Center to Aloha Stadium, with construction scheduled to start in 2011.

The administration also signed a “;Rapid Transit Stabilization Agreement”; with labor unions yesterday, guaranteeing no work slowdowns or stoppages.

Hannemann said the agreement helps ensure the use of local labor.

Hawaii Carpenters Union official Ronald I. Taketa said with 45 percent of the organization's members unemployed, the project could not have come at a better time.

Kiewit Pacific executive Lance Wilhelm said he expects that more than 700 people will be employed in the first phase by his company and subcontractors. Hannemann has said the 20-mile project is expected to employ 4,000 construction jobs and 10,000 new jobs.

As of July, state tax officials reported collecting some $354 million in revenues from the general excise tax increase on Oahu.