The following is an excerpt from an article that appeared Sunday, March 17, in the Honolulu Star-Advertiser, “Federal investigation, funding issues increase risk for rail bidders.” It features comments by Grassroot Institute of Hawaii President Keli’i Akina, who was interviewed by reporter Kevin Dayton.
___________________
… HART [Honolulu Authority for Rapid Transportation] officials have said the P3 plan is designed to shift the risk involved in construction of the most challenging stretch of the rail line to the private partners. Those partners will be required to complete work properly and on time if they want to get paid, according to HART.
‘Desperate measures’
But Kelii Akina, CEO of the nonprofit public policy think tank Grassroot Institute of Hawaii, worries that the city is contemplating an “unhealthy” P3 in which the P3 partners will have a great deal of leverage.
Grassroot Institute has supported public-private partnerships in other cases, but in this instance Akina said adopting the P3 strategy was “one of the desperate measures” the city has taken to try to cope with the escalating costs. That puts the city in a poor negotiating position, he said.
“The actions by the federal government are going to affect the credibility and the popularity of the rail project, and that has a political impact upon funding,” Akina said. “In any case, the city has to take a look at the spectre of potential loss of some measure of federal funds.”
And if the cost of the project continues to increase or the FTA withdraws any portion of the $1.55 billion it has pledged for rail, “the city is going to be very hard pressed to find partners that are willing to come in.”
“What the city is looking at is a plan to … have private entities fund the rail up front and perform work with the guarantee that no matter what they’re going to get paid, and that guarantee of payment takes away all incentive from the private entity to make the project successful and efficient, because they’re going to get paid anyway,” he said.
Grassroot Institute has been critical of the rail project in the past, but is now focusing its efforts on “fiscal responsibility,” Akina said.
