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Hawaii auditor says premature contracts inflated rail costs

HONOLULU — Officials prematurely awarded contracts for Honolulu’s commuter rail line a decade ago to minimize public criticism and show the project was moving along. But this practice dramatically swelled costs as plans changed, a new audit of the vastly over-budget project said Thursday.

The 20-mile-long rail line was estimated to cost $5.1 billion in 2012, but the forecast ballooned to $9.2 billion six years later. The rail is due to connect Honolulu’s western suburbs to the airport, downtown and the Ala Moana Shopping Center, Oahu’s biggest mall.

The city awarded its first rail construction contract in 2009 when the environmental review process was still underway, said the new report by the Hawaii State Auditor. That was also before the Federal Transit Administration approved starting the final design phase.

The city has had to pay hundreds of millions of dollars in penalties to a construction company as plans changed on the first contract. Other change penalties remain outstanding.

Hawaii lawmakers ordered the audit in 2017 when they passed legislation raising $2.4 billion in taxes to plug a funding shortfall.

The legislation extended a surcharge on the general excise tax by three years to generate $1 billion. The general excise tax, about 4.5 percent on Oahu, is essentially a business income tax that’s often passed on to customers.

Lawmakers raised the hotel tax — also called the transient accommodations tax — statewide by 1 percentage point to 10.25 percent for 13 years, through 2030.

The auditor said this is one of four reports it plans to issue on the rail project.
Source: The Garden Island

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