‘Panos’ estimates rail cost to reach at least $13 billion

Honolulu’s overbudget and behind-schedule rail system continues to climb in cost, and now probably will cost at least $13 billion by the time it is finished, according to University of Hawaii civil engineering professor Panos Prevedouros.

Prevedouros was the guest on the latest episode of Keili’i Akina’s “Hawaii Together” on the ThinkTech Hawaii network, Oct. 19, 2020, during which he talked about the future of Honolulu’s seriously ailing rail project.

Prevedouros, who is also a former Honolulu candidate for mayor, was highly critical of the rail project’s management, saying the current top executive of the Honolulu Authority for Rapid Transportation has transit experience but no construction experience, and neither did the original executive director.

A February 2006 draft plan for what has become a megaproject boondoggle estimated the 20-mile, elevated rail system would cost $2.5 billion. By November 2008, when Oahu voters narrowly approved going ahead with “establishment of a steel wheel on steel rail transit system,” the estimated cost was $4 billion. Now the official estimate now is up to $10 billion, and the project is only half finished.

In January 2015, Prevedouros was Akina’s guest for a show titled “Will rail be derailed?” It hasn’t been so far, but almost six years later, we can still ask the same question.

A full transcript of the interview is below.


Panos Prevedouros on “Hawaii Together”

Keli’i Akina: Hello, everyone, and welcome to “Hawaii Together” on the ThinkTech Hawaii broadcast network. I’m your host, Keli’i Akina, president of the Grassroot Institute. I’m delighted today to have a friend and an expert joining us, Panos Prevedouros. I’ll introduce him in just a moment. 

You can’t escape the fact that we’re in turmoil in terms of the Honolulu raild project, with skyrocketing prices and loss of revenues. The future of the rail project is back in question again.

There’s probably no one who has been intimately connected with analyzing the rail since its inception as much as professor Prevedouros at the University of Hawaii, professor of civil and environmental engineering. He’s a legend in terms of his insights with regard to the rail. Yet he does so much more in terms of infrastructure, transportation theory and so forth here for the state of Hawaii. We’re going to ask him to give us a catch-up, so to speak, as to what the latest is with regard to the rail. But first I want to say hello and welcome my guest today: Panos, welcome to the program. Aloha, always great to have you.

Panos Prevedouros: Thank you. Aloha, Keli’i.

Akina: How are things going there at the University of Hawaii with the opening of school?

Prevedouros: They’re going well, but of course, here I’m on campus, and it’s very quiet. Still, the UH is closed to the public, so we conduct over 90% of our business via Zoom like we are doing right now. Most of it is online. The library is open, but we don’t have many visitations. It’s a little bit strange, but education is happening.

Akina: The COVID has impacted us tremendously, and the response by government to COVID and its impact on the economy has affected us as well, not the least of which impact has been upon the rail project, and [I would] love to have you talk about that. But first, let’s go back a bit. You’ve been living this for about 14 or 15 years, since its inception. What did you think way back at the beginning, when we talked about this small little project that was going to cost $2.5 billion? I think now we’re up to $10 [billion], but back in its inception, what were some of your concerns, and what has borne fruit in terms of your prognostication since then?

Prevedouros: Right. At the time that I started working on it, I was applying my expertise in travel behavior. I’ve been doing surveys in Hawaii. Hawaii is an interesting place. We have a lot of ohana housing. We got a lot of people with multiple jobs — in other words, trying to make it in Hawaii. Then, having the government foisting a system of one linear line with 20 stations, it doesn’t geometrically, physically or in the way we live, fit with what people do. It didn’t take a genius at the time to say regardless, of course, this is not going to do much, because 20 stations do not jive with what the people in Oahu are doing. And of course, it’s an island. It’s not even one city.

A lot of population, East Honolulu, North Shore, Kailua, Kaneohe, all of it, Mililani. It doesn’t touch major destinations. Of course, as we started talking about it, the project started shrinking. It’s not even starting in Kapolei. It’s one mile out of Kapolei. It’s not even going to the UH. It’s not going to Waikiki. All of these things in the first couple of years, people started saying, “What is going on?” It got me started with technical opinions. 

Then we had Council members like Barbara Marshall, if you remember. She was always questioning things, and she kept appointing me to various boards and commissions to keep looking into it. Progressively, I got into the political side of it. I always started from the technical side of it.

Akina: Well, you gave us some dire warnings from the start. What’s one that has come to pass?

Prevedouros: Clearly, the cost and duration. We’re way past the point. [Then there is] the shorter version of the train. Remember the original was 34 miles. We [were] all settled. [Then they said, “Okay, we’re going to do 20 miles.” The 20 miles was supposed to be fully operational at the end of 2019, and there is no single mile that is operational in 2019. Now already, we started talking 2025, 2026. 

And then, of course, is the cost, where actually I was quite conservative. I was thinking $6.4 to $7 billion. As you said in the introduction, we’re already at $10 [billion] and we’re only two-thirds complete, and the most expensive parts are about to come to fruition now. So $10 [billion] is not the ceiling. Ten [billion dollars] is the current estimate which, I think, is going to go up to $13 [billion] or more.

Akina: Catch us up now. Let’s jump ahead from the beginning to the present day. 

We’ve had an announcement that the cost of the rail will go up by at least $1 billion. Now we’re at that $10 billion figure. We’re looking at the looming possibility that the federal government will withdraw its original commitment to help fund the rail, the next leg of it, and we’re facing real financial issues here. Tell us about the current financial hurdles the rail is facing.

Prevedouros: Clearly, it has a problem completing. I think we have enough money to complete and commission the train all the way to Middle Street. The most [problematic] section is — and the city knows it and HART knows it — is the last 4 miles because it’s 4 miles and seven stations from Middle Street to Ala Moana. We’re going to try to construct a 4-mile bridge through one of the densest downtown cities in the United States. That is very problematic. Already the original estimate for that was $1.4 billion. Two years ago, I said roughly this is going to be $1 billion a mile, so $4 billion. 

Already now we are at $2.2 billion for that 4 miles and, of course, we haven’t started. We’re just talking numbers, they’re talking numbers. It’s going to come very close to $4 billion to complete this very challenging segment, which brings me to the next point that you alluded to: What do we do with Middle Street? Should we stop? 

First of all, nobody is arguing about stopping the rail, as in killing it. The rail is here, it is reality. It’s clearly at the airport. Clearly, it’s completely complete in Kapolei, Waipahu, etc. So, up to Middle Street including the airport, the train will complete. The superstructure will complete. The rail yard is done. It already has two, three trains, a few more under construction, so there will be rail operated. 

A smart mayor, now, should take that — all the good points of it — and put it to work. Utilize whatever resources we have to make a fully operational train, Kapolei to Middle Street, and simultaneously pause, and really think of what is going on or what can we do with the last 4 miles. Because it’s not only the cost, it’s the state of COVID. It’s the state of the pandemic. It’s the state of fear.

Right now, and I’m quoting you national data, public transit ridership is 80%, eight zero, 80% down, in the United States. Where are we going sinking new billions of taxpayer money into a project that is not likely to be appreciated because of fear? Even when we have vaccination, etc., is it going to be effective? How many people will vaccinate? What is the fear of re-contracting COVID after you had it? 

This is a brand new disease, so fear will be with us. I’m not fearmongering here. This is just facts. It will be with us for the next couple of years, and then it’s going to have lingering effects. How many people will go back to mass transit? Why are we doing this now?

Akina: Let me back you up a little bit.

Prevedouros: Sure.

Akina: You raise the question, or the issue, of stopping the rail before it reaches Ala Moana. The most talked-about point has been Middle Street, although people are talking about other points. You seem to think, if I’ve got you correctly, that it is feasible to stop rail at Middle Street. What do you envision would take place in terms of the overall transportation infrastructure if we stopped rail at Middle Street?

Prevedouros: It has major points, and I published several of them. Actually, up to Middle Street, it’s a very proportional system. It’s 16 miles, all of it has gone to bed and it’s been constructed, so it’s a done deal. Sixteen miles, 16 stations, very nicely. Every station is 1 mile apart. We’re going to have extremely synchronized trains. It’s going to be a real fast service, Kapolei to Middle Street.

Why Middle Street? There is significant transit magic at Middle Street. It’s called the Middle Street Intermodal Center. In the late 90s, we got funded by the federal government to create a very large intermodal center for transit, so rail naturally stopping or ending there, it’s a natural, because we designed it like that. It’s not like you [can] stop rail at the airport. There is no transit intermodal “anything” at the airport. It will be simply a silly dead end.

Middle Street Intermodal Center — it’s a proper place for the train to stop and maneuver and process the passengers with existing bus lines, the existing Handi-Vans, the existing Uber and transit, and then taxi stations. Of course, we could route a few electric buses up and down Dillingham Street and make a direct connection to Chinatown and Downtown — just like that.

Waikiki [would be] a little bit more challenging. But saving $4 billion and still providing a reliable connection to Waikiki — it can be done for several million dollars but not $4 billion. 

Again, the new mayor has to weigh these things and argue, I think, successfully, because the FTA really promotes bus rapid transit and bus things to solve transit problems in cities. Give us the flexibility to adjust the system. Out of the 20 miles, we did 16. We did our best, but look at the money problem. The community cannot bear the cost anymore.

Akina: Now, do you think the mayor could really pause the rail as the current mayor is suggesting? Wouldn’t that entail exorbitant costs in terms of being able to restart it?

Prevedouros: It’s not going to be unilateral, it’s not dictatorial. He needs to assemble a team and go meet. First of all, he has to gather at least some partial support from the City Council. And then the mayor, [with] partial support of the City Council, [should] go to Washington and meet them, and then present the myriad of problems we have had and renegotiate the contract. That’s how it will be done. There isn’t too much that we’re going to lose.

The only contract that the current administration has led is the underground of utilities on Dillingham Boulevard, which is good to be done for resiliency purposes. If we get a hurricane, Kalihi will have better electricity distribution because there will be no power lines to fall down. It’s a little bit of make-work kind of project, but it has utility all by itself. It’s not completely lost monies and, of course, it’s going to look more beautiful because Dillingham Boulevard is not going to have any obvious utilities anymore, it’s going to be a clean street. There is some benefit to that. 

So, there are ways to adjust the budget and talk [the] FTA into some sense, because they’re co-responsible [for] this fiasco, and they know it.

Akina: What are your thoughts about the management of the rail at this stage? There’s been talk about the departure, possibly, of Andrew Robbins, the CEO, and that’s lent a little bit of instability in terms of discussions on the City Council and HART.

Prevedouros: I think we made two mistakes. We had two CEOs, Grabauskas and Robbins. Both of them, while they were very smart people and good communicators, they were the wrong people for the job. Grabauskas from Boston was a train operator. We are not having any operating train; it’s a construction project. Robbins from Canada — Bombardier — was essentially a train salesman. He knows a lot about rail systems and how they operate. We’re not operating any rail system, we’re building a bridge with some stations. Both of them were really out of their element in terms of managing this project. They’re transit officials, and this is not a transit project, it’s a construction project.

The management has been very poor because, at the top, you can sell these people a bill of goods and they will purchase it, because they are not construction experts, particularly, in Hawaii, which is a very difficult place to do construction because of our very special soil conditions, materials conditions, cost conditions, labor conditions. All of these are very unusual, and none of them had the expertise to really understand. So whatever people told them, they said yes, and they tried to manage the problem with words. Obviously, words don’t cut it.

Akina: That’s a very fascinating perspective. We’re going to return in just a moment. We’ll take a break. My guest today is Panos Prevedouros. We’re talking about the rail, getting the latest update. Don’t go away. I’m Keli’i Akina on Think Tech Hawaii Broadcast Network. We’ll be right back after this.


Welcome back to “Hawaii Together” on the ThinkTech Hawaii broadcast network. I’m Keli’i Akina, your host. My guest today is Panos Prevedouros. We’re going to jump right back into it because this is such a fascinating topic. He’s giving us a catch-up on the current rail situation in Honolulu. Panos, thanks for standing by, again.

Prevedouros: Sure.

Akina: There’s been a lot of talk about P3, public-private partnerships. That, in a sense, was the salvation, so to speak to the funding situation for the rail, but this has apparently fallen through, and we’re facing a lot of difficulties in getting a suitable PPP up and running, and finding a partner who will actually come in and be the one that will get us out of the mess. What are your thoughts about this?

Prevedouros: My thoughts are that we’re desperate, and we’re not in a situation to be able to strike a deal that would be beneficial to the taxpayer. We’re begging for money. We’re begging for the private partner to come and front $1 billion or more to complete the project to Ala Moana, and it hasn’t worked so far. We put $1.4 billion on the table. One of the partners apparently put a bid down for $2.2 billion, and the others, maybe higher still.

Bottom line is that this is a difficult project. The construction industry understands that they cannot do it for a low amount. Unfortunately, it’s not good for the taxpayer, because those people are fronting the money for us to finish it in the next five years for a return, which in addition to the regular cost and profit, has a special interest for all the money that they’re fronting because banks are involved, etc.

This is difficult because it’s the type of project that does not generate any money to pay off its expenses. See, P3s, or public-private partnerships, are very common when you do major debts for hydroelectric. You put the plant there, it generates electricity. You sell electricity. You make a profit. You pay off the proceeds. The train that will never make a profit. Out of the farebox, at best, with their original estimates of ridership, will cover 30% of the operational costs and none of the construction costs. So, it is a guaranteed loser, which means the following: The money has to be repaid. There is only one way to repay it: taxpayer.

So the extra profit of the P3 partner who’s going to front the money to finish it will have to be paid by the taxpayer. The GET is not going to cut it, because the GET is not even collecting the money that it promised to collect. Tourism has — right now, it started, but at about 20%, 25%. I don’t know if we’re going to maintain that level, how high it’s going to go. Bottom line is that we used to collect $150 million a year, and now we’re not even collecting $20 to $30 million a year in GET. It is a significant reduction in revenue. Right now, we’re in dire straits. We don’t have the money, and even if we open the rail, we’re not going to have the ridership. It is a clear lose-lose.

Akina: Talking about dire straits financially, let’s go to the federal side. The FTA funding, what’s the status of that, and is it likely that the funding will still be provided to Hawaii?

Prevedouros: That’s the thing, that we really need to sit down with these folks and say, “Look what has happened here. Yes, we promised the 20 miles, but we are having such a very hard time delivering even 16 miles, so help us out here.” 

We’re going there with the wrong perspective and trying to go through their hoops and stick to a deal that is no longer feasible. Of course, now, we have to put them to test and say, “OK, you guys gave us and approved the forecast we had for ridership. Now we’re going to get only 20% of that ridership, so where are we going with this?”

They need to help us finish it in a way that makes sense. One of the ways that make sense right now is to completely complete the rail and commission it. “Commission it” means it’s a completely ready system, like you buy a car from a manufacturer ready to start it and it works. It’s one thing to construct, it’s another thing to commission the rail. It’s going to take almost another year to make sure that everything works: the elevators, the escalators, the doors open reliably, everything. The commissioning of the system is very tedious, and a process that takes a lot of time. They need to help us to have a fully functional system to the airport and Middle Street, and that’s going to take at least another couple of years and several hundred million dollars more to finish that.

After that, let’s see where we are. Do we even get some ridership to the airport, etc.? Do people actually use it? There are a lot of questions, and FTA is a partner. They’re not writing blind checks. We need to bring them to the table and negotiate a feasible deal for this project. If anything, I would go, actually, and say, “There have been so many delays — up your gift. We need help. What are you talking about, the second half, $750 million? We need a couple more billion dollars. Can you please help us with it?”

Aim high. Here, with the administration we’ve been having, every time we beg and we ask for forgiveness. Why? I have seen the studies and what they approved in the beginning. They were essentially — I don’t want to use bad words — co-conspirators. It wasn’t a conspiracy, but they’re co-responsible for what happened, and they haven’t been particularly helpful along the way. The local taxpayer got severely affected, and the feds didn’t help other than providing some sharp criticism, but that’s too easy to do. I can do it from my office. I don’t need 20 people in Washington to do that. They need to help.

Aina: We’re in the midst of a mayoral race, as you know, and that adds to the transitioning that’s going to take place in terms of the future of the rail. As you look at each of the two candidates, Amemiya and Blangiardi, what are your thoughts in terms of what each has to offer in terms of strengths or weaknesses for resolving our rail situation?

Prevedouros: I have no faith in what Keith Amemiya is going to do. If I’m a little harsh at him, I would call him Kirk Caldwell, Version II. So status quo, the “same old same old,” is not going to work. “Same old same old.” It means every year, literally, we add $1 billion. We cannot continue with that. 

At least Rick Blangiardi is entertaining options. His answers, “We’ll never stop rail, that’s unrealistic, but let’s see. I want to get elected, have a clear talk with HART, and have a clear look at their books and make a business decision as to where the numbers are leading us. If their numbers are untraceable or improbable to be able to pay these amounts and finish it, we have to develop a Plan B.”

Once you get your act together, the Feds will play along with it, because then you’re proposing a rational alternative, whatever that alternative might be, whether it’s going to be permanent or temporary. Everything is temporary. You can argue, you can succeed, that you stop the rail at Middle Street, and then another Mufi Hannemann or what have you, 10 years down the road, is going to take the train from Middle Street to the UH. Nothing stops that.

For now, though, we have to stop loss, and clearly, we don’t have the money to complete it in the next five or six years. A reasonable position would be something like what Blangiardi says: Look at it as a business proposition, look at the books and see where the money takes us. How much money do we have? The money we have, we should use it to finish it. 

Commissioning the system is very important. This is a very expensive system that has at least the possibility to do some productive work. Focus on having a productive system, Kapolei to Middle Street ,that operates and does something for our population. They’ve been paying for that since 2008. Time for them to see some return. 

If nothing else there will be cleaner, larger, faster buses running on the guideway. Have them see it. Have them use it. Then after Middle Street, we can start thinking about, “Do we really want a 4-mile bridge through Chinatown, Downtown, Kakaako, and all the way to Ala Moana?” Do we really want that? Is there any ridership to justify that decision? 

I think a pause would be something that we should consider, and I think only Rick Blangiardi is willing to consider that option. For me, that’s where my vote goes.

Akina: What do you think the overall impact of COVID has been on the rail? You’ve alluded to it a bit earlier, and how do we factor the COVID response into the future of rail?

Prevedouros: Yes, that’s an excellent question because we already know what happened in the past. There’s going to be one year of calamity, we know that. It’s a calamity of [the fact that we] didn’t collect the money and, of course, our transit ridership has dropped by 80%, as I mentioned. But people are all about change. The situation may change. I don’t think it’s going to change, and change the day after the election or January 1st. I think it’s going to change sometime in April or later, after we go through the winter, the winter flu things. COVID will still be a threat, better and more vaccines will be available by spring. We may be able to start having a more normal summer.

At that point, we’ll see how things begin to develop in terms of GET collections, people’s reaction to using mass transit, etc. However, overall, the trend is not positive for small cities with transit systems, because we know from the past that Uber ate their lunch. Services like Uber, smart taxis, automated taxis, automated vehicles, and all, that’s the future of 2050 and beyond. This train was obsolete the moment that Mufi put it on the table. Now, with automated vehicles and coming technologies in 2030, 2040, this rail will be completely obsolete by 2050, and we’ll already start talking about divestiture, doing something else with it, because as a train, it’s not going to work.

Akina: What a future we have before us with the rail. Panos, I wish we could talk longer today. I want to thank you so much for sharing your insights. If anyone would want to get ahold of you, talk with you, how do they connect with you?

Prevedouros: The best is via Facebook or if they have a specific question, they can feel free to email me at pdp@hawaii.edu or find me through the web or at the UH or Facebook.

Akina: Thank you for being with us again today. I’m Keli’i Akina on The Think Tech Hawaii Broadcast Network. We’ve had our guest, Panos Prevedouros, and we will see you next time. Aloha.


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