Big Business Leaders Align to Save City’s Planned $5.3 Billion Honolulu Rail Project As Its Popularity Declines

BY MALIA ZIMMERMAN – With growing public cynicism and skepticism about the city’s planned $5.3 billion elevated steel on steel rail project, a number of stakeholders are stepping up their public relations efforts to ensure the 20-mile project is actually completed.

About 30 powerful big business leaders formed a group, Move Oahu Forward, in February, with the backing of Hawaii’s Senior Senator Daniel Inouye, and announced their organization members today. They hope to convince the public the rail will improve Oahu.

While they have money, power and connections on their side, rail critics say they have truth on theirs. They note the project has lost support because it has changed so drastically since the public voted to approve the controversial project by a narrow margin in 2008, and because of deception by those in charge.

As Honolulu City Council Budget Chair Ann Kobayashi points out, voters believed in 2008 that the rail would cost $3.7 billion and be several miles longer, extending to the Salt Lake and the University of Hawaii’s Manoa Campus. Now the rail has ballooned in cost by about $1.6 billion and will skip Salt Lake and stop at the Ala Moana Center, far short of the University.

Former Gov. Ben Cayetano, a rail critic running for Honolulu mayor in part to stop the project, said before the 2008 rail vote, the city administration under then Honolulu Mayor Mufi Hannemann spent $5 million on advertising the rail, and hired 10 public relations firms to gain public support – all on the taxpayer dime.

As more information is released about the project via Cayetano’s mayoral campaign, and discovery in a federal lawsuit challenging the validity of the city’s environmental impact statement selecting rail as the best alternative, public support has further diminished.

Recent polls show just over 30 percent of the public now favors the project. And city council members, who with few exceptions, blindly supported the project, are now asking more probing questions about finances, funding, management and construction impact.

The stakes are high. Billions of dollars will go to contractors and their vendors – and in some cases, back to the politicians who support the deal. And Hawaii’s big business leaders, many who benefit financially from the project, don’t want it stopped.

Connie Lau, who also heads Oahu’s monopoly energy company, Hawaiian Electric Industries, and is co-chair of the group Move Oahu Forward, said: “We have a rare opportunity to vastly improve our transportation system on Oahu and secure a better quality of life for many in our community. The recent accident that shut down a big part of the H-1 freeway magnified the need for a comprehensive, integrated transportation solution that should include rail transit, in addition to our buses and highways.”

Richard Dahl, Move Oahu Forward co-chair and head of Campbell Estate, one of the state’s largest landowners, said: “This is a critical time for the rail transit project.  We lost the opportunity before and we cannot afford to lose it again. We have confidence in the Federal Transit Authority’s (FTA) review process and believe that Honolulu has a very viable project with a sound financial plan. We are pleased to hear that the project has already collected more than $800 million in General Excise and Use Tax (GET) revenue, which is ahead of projections and in addition the cost of the project is below the estimated cost. ”

Cayetano, who in addition to being a candidate for mayor is a plaintiff in the federal lawsuit challenging the rail project, said these companies “want at least $5.27 billion of our tax dollars spent on an obsolete rail system that wouldn’t reduce traffic congestion and would slash a 20-mile concrete scar from Kapolei to Ala Moana.”

“If these wealthy executives think rail is such a good deal, all 30 of their companies should chip in $180 million each and buy the thing,” Cayetano said.

Kobayashi said she was surprised the businesses are spending so much money to promote the rail project, when it is already underway. “I could not understand why the business group is getting money together to spend money to convince people. I mean is there a vote? I just could not understand the reasoning. I would rather see that money go to something like the Cancer Society or the Domestic Violence Action Line or more affordable housing. There are a lot of groups that could use the money,” she said.

University of Hawaii Law Professor Randall Roth, who has been a whistleblower for public and private corruption during his well regarded career, said: “Billions of dollars will draw a crowd whether you spend it on a railroad or throw it from the top of a tall building.  And then there are CEOs with business reasons not to say no when Sen. Inouye asks a favor.”

Roth, who is another of seven plaintiffs in the federal lawsuit, said: “Those on the list who claim to favor rail on the merits will hopefully agree to participate in a public debate in which participants are allowed to question each other.  The public would surely prefer that to another wave of slick, pro-rail propaganda.”

This is not the first group pro-rail advocates have formed. Go Rail Go and the Pacific Resource Partnership have also run campaigns to promote the project.

University of Hawaii Engineering Professor Panos Prevedouros, one of Hawaii’s best-known rail critics, said “There are hundreds of large companies and thousands of small businesses on Oahu. But now the usual pro-rail suspects* got together and gave another name to the old and tired Go Rail Go which morphed into a construction unions operative.”

In terms of those in the Move Oahu Forward group, he said Hawaiian Electric Company, headed by Move Oahu Forward co Chair Connie Lau, alone has given Oahu the nightmare of 77% oil dependency for power generation and power rates 300% higher than mainland, and climbing.

“Instead of cutting down, it wants to sign up the 40 MW electric rail customer. How greedy and irresponsible!” Prevedouros said. “Move Oahu Forward?  “Move Oahu Toward Us” … for our sustained profiteering, is more apt.”

One of Hawaii’s largest landowners, Campbell Estate, also is supporting the project, and the rail’s pilings are being housed there.

Prevedouros said the estate should be “credited” for giving Oahu mainland suburban sprawl (where transit has no chance to succeed,) instead of diversified agriculture.

“If they are so proud of their second city why do they need a $5 billion dollar tether to the first city for it?” Prevedouros asked.

The group does include a few surprises, Prevedouros said, such as Hawaiian Airlines and Outrigger Hotels.

“Business dealings and obligations to bankers and other creditors are partly at play here. Don’t forget that Aloun Farms has agreed to be obliterated by B.R.Horton’s Hoopili development in Ewa.”

He noted former Mayor Mufi Hannemann, who pushed through the project in 2008, manages the Hawaii Hotel Association.

In addition, Sen. Inouye, the project’s biggest cheerleader, can facilitate for foreign landing slots for Hawaiian Air, or intervene to protect HA stronghold markets, Prevedouros said.

“All kinds of interactions are at play. The rail is the tip of the collusion and interdependency iceberg. Overall, however, it is becoming clearer who the political puppet master is in the Honolulu rail affair.”

As Honolulu Mayor Peter Carlisle said last week at a rally for the rail project with construction workers and U.S. Senator Daniel Inouye by his side, this is a key time for the rail project’s future.

While technically the project is on track, and construction has already begun in recent weeks, a number of factors could derail it include the lawsuit, the mayor’s election, council action and $1.55 billion in federal funding now pending.

City Council members are trying to determine whether they will approve an additional $1.9 billion in bond authorizations for the project, when the rail was sold to the public on the promise that no money would be borrowed. The council approved the proposal in the Budget committee last week via Bill 33 over the objections of the council chair, but could be killed in a future vote.

In addition, the city administration and Honolulu Authority for Rapid Transportation (HART) – wants another $100 million authorized for the project – for a total of $450 million from the city taxpayers.

HART also wants to reserve the right to take $244 million in funding from the city’s Handivan and TheBus maintenance funds. That has further outraged the public, and the council, because bus riders now coping with cuts to The Bus and Handivan service, and the delayed maintenance may further impact services, Kobayashi said.

See the Move Oahu Forward Board of Directors

Editor’s Note: This article originally listed Richard Dahl with the Bank of Hawaii. He is president & CEO of James Campbell Company. We regret the error.

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