Baruch Feigenbaum pulled no punches on Tuesday when discussing reforms that might solve some of Hawaii’s transportation challenges.
Feigenbaum, senior managing director of transportation policy at the Reason Foundation, told host Keli’i Akina on the latest “Hawaii Together” program on ThinkTech Hawaii that, “sadly, just about everyone in transportation is familiar with the light-rail line on Oahu,” which he called “probably one of the biggest disasters I’ve ever seen in terms of oversight and management of the project.”
“It looks like either the folks who were selling the project had no idea what they were doing or they deliberately misled the taxpayers of Hawaii — or maybe both — because there’s just no way that you could make engineering miscalculations along the type that have been made here,” he said.
He suggested contracting out the operations and maintenance of rail to “get companies that have experience operating the system,” since there’s “not going to be many folks on Oahu that have operated a system before.”
Speaking about Hawaii’s airports and harbors, Feigenbaum recommended relying on the private sector to manage them, either through privatization or “a contracted solution.” He said Daniel K. Inouye International Airport in Honolulu, for example, could be leased to a private airport management company.
“The state is not specialized at being an airport operator,” he said, “and if you [compare] Honolulu to some of the other comparable airports, they’re not doing a very good job.”
To improve Oahu’s bus system, he again recommended contracting with private operators. He also cited the need for more flexibility, such as using smaller transit vehicles where 40-foot buses might not be warranted.
To reduce traffic congestion, Feigenbaum said a network of “optional priced-managed lanes . . . would be very, very good for Honolulu.” And, “If you look at H-1 and H-201, there’s right-of-way on most of the corridors on Oahu to build these lanes where they would make sense.”
To hear the entire interview, click on the video below. A complete transcript follows.
4-11-23 Keli‘i Akina hosts Baruch Feigenbaum on “Hawaii Together”
Keli’i Akina: Aloha and welcome to “Hawaii Together” on the ThinkTech Hawaii broadcast network. I’m your host, Keli‘i Akina, president of the Grassroot Institute of Hawaii.
You know, as an island state, Hawaii has unique transportation needs. We depend upon shipping and airlines for most of our goods. At the same time, our airports are constantly rated as among the worst in the nation in terms of visitor satisfaction.
And then there’s the Honolulu rail construction project. It’s way over budget, it’s way behind schedule, and it seems like it may not be completed in the near future.
With all of these challenges, are there any reforms that could help? Well, that’s the topic of today’s show.
Joining me to talk about this important subject is Baruch Feigenbaum. He’s a senior managing director of transportation policy at the Reason Foundation. That’s a national nonprofit think tank based in Los Angeles, which, like the Grassroot Institute, is committed to individual liberty, economic freedom and limited accountable government.
Baruch is on the Bus Transit Systems and Intelligent Transportation Systems committees on the National Transportation Research Board.
Thank you very much for being with us today, Baruch. Welcome to the program.
Baruch Feigenbaum: Well, thank you, and thanks, Keli‘i, for having me on.
Akina: Well, we’re glad you’re here and perhaps we’ll get you here in Hawaii, live. Right now you’re in Virginia, right outside of Washington, D.C.
Feigenbaum: That’s correct. So definitely not Hawaii, but close to where the nation’s policymakers are making some questionable decisions.
Akina: Well, Baruch, can you tell me a little bit about your background, and how is it that you came to work in transportation policy? You’re with the Reason Foundation, right?
Feigenbaum: Right. And that’s actually a great question. I was always interested in transportation from when I was probably about 5 years old, looking at how roadways were designed. And I had a background in public policy, and then I went to get a planning and engineering degree from the Georgia Institute of Technology.
And so a lot of folks who do that go into consulting, but I was more interested in the policy side. So first I worked on Capitol Hill for a member from Georgia who was on the Transportation Infrastructure Committee. And then this position at Reason thankfully came open about 12 years ago. And so I’ve been working at Reason all this time and it’s been a great time.
Akina: Well, we’ve had some experience with people from Reason, especially a gentleman, you probably know him well, Robert Poole. Robert was one of the critics of Honolulu’s rail system when it first came out. And he was an expert on airports and highways management too. Are you carrying on in that tradition? Are you taking on the work that Robert Poole started?
Feigenbaum: So, I am. Robert is nearing retirement and so he’s cutting back a lot on his responsibilities. And so I’m taking on many of those same tasks and hopefully doing it as well as him. He set a very high bar, so that’s something I definitely hope to achieve.
Akina: So, I’m pretty sure you’re familiar with the Honolulu rail, and as I mentioned in my introduction, it’s over budget, it’s delayed, it’s behind schedule, there are financing issues.
Our mayor recently announced that the first segment of the rail is going to open this summer, but that was originally planned to be fully completed three years ago.
So now that the rail is soon to be up and at least partially running, what advice would you give our city officials who have oversight over the rail? Is there a way at this stage to maximize the value of rail as a transit option, while at the same time minimizing the cost to taxpayers?
Feigenbaum: Sure. So, I think, sadly, just about everyone in transportation is familiar with the light rail line on Oahu. I think it’s probably one of the biggest disasters I’ve ever seen in terms of oversight and management of the project.
And so the first phase is going to open, and so the idea is they want to operate it as cost-effectively as possible.
There’s a couple things that I think they should do. They should look at contracting out the operations and maintenance. Many other transit systems across the country do this. And with contracting out, you get companies that have experience operating the system.
There’s not going to be many folks on Oahu that have operated a system before. They would’ve had to have come from somewhere else. And you’re also going to get some economies of scale in terms of service planning, and in terms of operations and best practices.
That’s really something we see with all kinds of contracting out and privatization is those economies of scale and also the ability to learn from peer systems and adopt best practices.
Akina: You know, there’s been a lot of up and down in terms of starts that haven’t gone as well as we had hoped with regard to the rail.
At this stage, late in the game, are there any strategies that the county can take to really minimize the costs and improve the capacity to finish the project?
Feigenbaum: I think at this stage in the game, the best thing to do would be to enforce the provisions of the contract they have with the folks building it. So that includes penalties for being delayed, that includes making sure that there’s quality control in the system.
I will tell you we had a problem at a rail line near where I am in Washington, D.C., where the type of concrete panels they used in the stations weren’t actually built to specification. And if the line were allowed to open as it was, those concrete panels could have come down and killed someone.
So making sure that there’s actually management and oversight of the panels, sadly, there’s not a ton that can be done at this point in time for the first phase, although I do think there should be some radical changes for the rest of the line.
Akina: I was intrigued when you mentioned earlier that the Honolulu area rapid transit rail system has a national reputation and is known all throughout the country. I know you go to a lot of transportation conferences, you have many colleagues in the industry. But tell me a little bit more about that reputation that Honolulu has.
Feigenbaum: Yeah, I think the biggest reputation is the delays. As you mentioned, the project is years behind schedule and the cost overruns, in terms of being in the billions of dollars.
It’s not unusual for transit projects to be delayed or for cost overruns. In fact, transit projects are probably 50% more likely than highway projects to face those kind of problems.
But something like this is really, there’s really no parallel to it. And it looks like either the folks who were selling the project had no idea what they were doing or they deliberately misled the taxpayers of Hawaii — or maybe both — because there’s just no way that you could make engineering miscalculations along the type that have been made here.
Akina: Because of the fixed stops of the rail system, it’s going to have to integrate with other modes of transportation in order to really meet the needs of local riders. In particular, it will have to integrate with the bus system.
Now, our bus system in Honolulu is run basically by the city. They have a private corporation, but it’s a monopoly that requires close to $200 million in subsidies from the taxpayer every year.
Let me ask you this question: For mass transit in general, whether it’s rail or bus, what are some of the best practices around the nation? From your research, what works and what doesn’t?
Feigenbaum: Sure. So there’s a number of things that the city could do to improve its bus system or the state or Oahu itself.
I think the first one is, where possible, do more contracting with private operators, because there’s an ability to keep costs down — or at least lower them from where they are — and also improve the service quality.
The other thing that I’d like to see is more flexible design, so there doesn’t need to be a 40-foot bus on every route.
A lot of places now are going to what we call micro-transit, which is smaller transit vehicles that can go on routes that really can’t support a 40-foot bus. Some of these micro-transit services also are flexible, meaning they don’t necessarily serve the same fixed route service every day.
We also see a lot of transit systems partnering with Uber and Lyft, or partnering with even taxis or other types of smaller vanlike services.
We’ve seen employers coordinate what we call vanpools, which are seven-to-15-person vehicles that take people from work to a general residential area, and there’s discounts for driving the van as well as discounts for being a backup driver, since those are a little bit more arduous than just sitting in the van.
So, there’s really a lot of different solutions. What needs to happen here is there needs to be thinking away from the 40-foot bus.
I’m on the Bus Transit Systems Committee for the Transportation Research Board, and so I like bus buses more than some of your average folks, but we’ve got to realize that they’re only the right solution in certain circumstances.
Akina: Well, let’s talk a little bit about our airports. That’s the gateway into Hawaii for the vast majority of people who visit us.
We’ve had a lot of renovations take place recently. They help, but still, in terms of consumer satisfaction, we have very low ratings in terms of the visitors who use the airport.
Daniel K. Inouye Airport, our main airport, International Airport in Honolulu, is one of the worst-rated in the country, and our neighbor islands also have very low ratings of their airports.
Now, currently, all of these are managed by our state Airports Division, but there’s some decisions that the Legislature has been mulling over in terms of the management structure. Some have been included in bills that talk about perhaps some private or semi-autonomous management corporation.
What do you think about this? Do you think we need to move away from state management into a more privatized management? And how would that differ in terms of the output and the product that is created?
Feigenbaum: Sure. I think looking at the airports, it’s absolutely time to move to either private operation or contracting out. The state is not specialized at being an airport operator, and if you look — especially comparing Honolulu to some of the other comparable airports — they’re not doing a very good job.
And so what we recommend is actually leasing the airport, leasing it to an airport management company. That’s happened in some places in the U.S. San Juan, Puerto Rico, has been probably the most famous, but there’s been a couple of others — Branson, Missouri, as well. You also see that across the world in East Asia and also in Western Europe.
The idea there is that the airport leasing company gets a lease for a certain amount of time, and if they don’t adhere to that lease, that lease is canceled and it’s retendered to another operator.
There tends to be probably five to 10 companies that have an interest in U.S. airports, and it would really help, I believe, improve the quality of the airports.
You go to some of these leased airports and you see just what a better job a professionally run company does, compared to the state.
Akina: Now, are there some federal regulations that would interfere with Hawaii being able to privatize some of its airport operations? And if so, do you have any suggestions for our congressional delegations?
Feigenbaum: Sure. So in terms of the contracting of services, there are no specific regulations. In terms of a purely privatized airport, there are some regulations and they’re going to be difficult to overcome. So even though that’s a tempting option, I don’t know that I’d recommend it.
One of the challenges for the leased airports is that it does have to get approval from the Federal Aviation Administration. And that can, of course, become a partisan exercise. Especially, the current administration does not seem particularly interested.
So if the Hawaii delegation makes it known that they really want to improve the airports, I think that would have quite a bit of say. Obviously, Hawaii’s a major tourism destination, and I think the administration is more likely to listen to the local delegation.
Akina: Well, let’s talk a little bit about harbors. It looks like we’re covering the full gamut of transportation in our state. Our harbors are run by the State Department of Transportation and progress and renovations and repairs generally move at a snail’s pace.
Now, I’ve been on several tours of the harbor and it’s apparent immediately that many of the buildings and structures need to be renovated. There are some businesses operating out of containers because they simply can’t get the kind of facilities they need for their offices.
What have you seen in terms of best practices in operation of harbors, and what do you think we could do here in Hawaii?
Feigenbaum: Yeah, so harbors are actually a good opportunity, and it’s a part of transportation that I think people often forget about.
Probably the best case is what Delaware did when they privatized their port of Wilmington in 2018.
And some of the other ports — and of course, ports operate alongside the harbors — have been contracted. One in Southern California that’s used for a cruise ship terminal. There’s also been some other contracting for some of the container ports that are used for ships.
There was an attempt in Hawaii, I know, among for the small boat harbors, and that was something that I know sort of failed for political reasons.
I think the contracted solution may be more politically palatable than pure privatization because with the contract solution, you’ve got that check, shall we say, where if the company that’s actually operating the harbor or the port doesn’t do a [good] job, they can essentially be fired by the folks who are monitoring the contract, which is often a public sector entity, compared with pure privatization.
I think pure privatization will be better. I also want to be realistic on what we can actually get accomplished.
Akina: Well, some people push back against the idea of privatization on the grounds that a private entity will possibly cut costs, do a poor job to make an extra dollar, and so forth. In your experience, is that a well-founded concern?
Feigenbaum: So that is not a well-founded concern, and we hear that a lot as well. And if you think about it, that does not make any sense. Because if you’re a private operator, there’s no incentive for you to cut costs on services, because then you’re going to make your customers unhappy. And if your customers are unhappy, they’re not going to do business with you.
And so the idea that there’s going to be some sort of, you know, major cost-cutting … sometimes there is cost-cutting to improve the overall service level, to go ahead and make things more efficient, to make the customers happier.
But it’s not cost-cutting in terms of making it unworkable, having a facility that nobody wants, because that just makes no sense. It goes against the rules of business and the rules that they’re trying to make a profit.
Akina: When we come full circle in terms of transportation in Hawaii, we have to look at roads as well.
In fact, roads are so essential that, although Hawaii is not contiguously related to the rest of the continental United States, the federal government funds the Interstate Highway System through Hawaii. And that’s kind of ironic, because how would you cross the Pacific using the Interstate Highway System?
But it’s important, at least, to get from Honolulu Harbor to the north tip of Oahu for defense purposes as well.
But in any case, in general, it’s not so much looking at federal funding but looking at our state highways; our roads and our conditions are pretty rough at times. Maintenance takes place constantly, especially out here with the salt water and the elements, the sun, the heat.
But on top of all of that and the construction on the roads, people have to deal with traffic. We’re a small island, but rush hour traffic can be unnerving to many people who travel over an hour each way in order to get to work and from work.
Any thoughts about that? How can cities reduce the congestion, the traffic congestion in particular?
Feigenbaum: Sure. So this is a major concern I think for every metro area, and driving by car is going to be the No. 1 way that folks — the majority of folks — get from their home to their work. Certainly, more than the number of folks who are going to be taking light rail.
So in terms of options, there’s really a lot that can be done. And what we recommend — and I think it would be very, very good for Honolulu — is a network of optional priced-managed lanes.
And what these are is, these are new capacity that folks can choose to use during peak periods in order to give a more reliable travel time. And so it might be a more reliable travel time needed because of an important meeting at work. It might be picking up a child from daycare. It could be a variety of different things.
I’ve taken a look, and if you look at H-1 and H-201, there’s right-of-way on most of the corridors on Oahu to build these lanes where they would make sense.
In some cases, they might need to either be, well, let’s call them submerged, somewhat below ground, although they’re still not totally in a tunnel. They can also be elevated, although, obviously, there are some eyesore concerns there.
These lanes are typically built with P3s — public-private partnerships — with a contracted private party that takes care of designing, building, financing, operating and maintaining them.
And generally, because these lanes, there’s demand for them during the peak periods, they’re very attractive to outside investors, to folks who operate transportation management companies as investment tools. And so throughout the country, we’ve seen a lot of success in them.
Honolulu is interesting because it actually has the fewest number of lane miles of any metro area anywhere in the country. And obviously, it’s on an island, so that is a factor, but it also suggests that there’s not as many roadway miles as there need to be in order for folks to commute.
Akina: You mentioned PPP — public-private partnership — and that’s a term that is bandied about quite frequently here in Hawaii when it comes to public projects, whether we’re talking about the rail system, roads or the stadium that is under consideration at this time.
In one sense, it satisfies some of the need to bring some private management into the picture, but I understand that there are pitfalls and that all PPPs are not the same.
Could you talk about the benefits and the potential downsides of PPPs and how they should be structured?
Feigenbaum: Sure. So it is true all PPPs are not the same. We’ve often said if you’ve seen one of these P3s, as we often call them, you’ve seen one P3.
And so the important part is making sure that it’s a deal that’s going to work for both taxpayers as well as the private concessionaire that’s involved.
And so some of the common elements that we’re looking for is risk-transfer. Generally, transferring the risk of a project that is going to go over budget or go long, such as what we’ve seen right now with the Honolulu rail line, but because there was no P3 there, taxpayers have to eat that. If there was a P3, then that would be borne by the concessionaire company and taxpayers wouldn’t pay a dime.
But there are some things that the state maintains responsibility for. So that’s things such as right-of-way, preconstruction activities, just because handing some of those things to the private concessionaire are not feasible.
What’s really needed is a deal that works for both parties. And there has to be someone knowledgeable in Hawaii DOT to go ahead and manage the project, because the private company that’s working on the P3 has done many P3s across the world, they’re very sophisticated, there has to be someone working for taxpayers that has that same level of expertise.
Akina: In what way can the private sector be incentivized within a PPP to put in the very best effort at the front end for quality construction, and continue to operate and maintain the system as it goes on?
I understand that if they’re not incentivized to do so, it could be easy to cut corners at the front end, because they don’t have to be around at the end. But what are your thoughts on what can be done?
Feigenbaum: Sure. So there’s a couple of things that can be done, and it really comes down to how the contract is written. What’s important is that if it’s a 50-year P3, for example, they need to be giving that project back to the taxpayers at the end of that 50-year period in as good a shape as when it was constructed.
And so that actually has to go into the provision that the pavement is going to be such a thick standard and the international roughness is going to be such, so that it’s like getting a brand new road at the end.
There also has to be some type of clauses to allow for adjustments in the project if the state should want to make changes. There have been some cases where the state has wanted to build additional free capacity in that corridor, and that has also caused some heartburn for the private sector and has led them to do things that maybe are not great. And so making sure there’s sufficient change that is built in over a 50-year period is also important.
Akina: Baruch, I know that the Reason Foundation looks at some broad philosophical issues when it comes to down-to-earth practical matters like transportation. Here in Hawaii, we have often looked to the federal government as a solution to many of our transportation needs, at the very least as a partner in being able to construct and to maintain transportation infrastructure as well as operations.
What are your thoughts about what the role of the federal government should be? The pros and cons there, and how dependent should Hawaii be on the federal government for its transportation?
Feigenbaum: So I think Hawaii should try to be as non-dependent on the federal government as is possible. They do contribute a certain amount of funding. There’s matching programs for highways, for aviation, even for ports.
The problem is the federal government comes with strings, and you have to do things in terms of design standards, in terms of the way the contracts are structured, that make it very challenging.
The other problem with relying on the federal government is the federal government doesn’t pioneer much in the way of new ideas. Most of the new ideas actually come either at the state level or from the private sector. And so working with those organizations is really a much better approach.
The federal government has been trying to solve the transportation funding challenge, for example. We have a gas tax, it’s got declining revenue because people have more fuel-efficient vehicles, electric vehicles and hybrids. And they’ve been working at it for 15 years and they haven’t solved this problem.
And meanwhile, many states — Oregon, Virginia, Utah — have come up with different variations of a mileage fee, which may or may not be the solution, but they’ve come up with something.
So I say in terms of the federal government, it’s generally as little as possible. Those matching funds may seem tempting, but only take them if it’s a project that you actually need.
Akina: Well, Baruch, I want to thank you very much for your insight today. Very fascinating, and I look forward to chatting with you some more in the future. Appreciate you being on our show today.
Feigenbaum: Thank you very much. It’s been my privilege.
Akina: My guest today has been Baruch Feigenbaum. He is the senior managing director of transportation policy at the Reason Foundation. We appreciate his insights today.
Thank you for being with us today on “Hawaii Together” here on the ThinkTech Hawaii broadcast network. I’m Keli‘ii Akina, your host. Until next time, aloha.