 everyone and welcome to Hawaii Together on the Think Tech Hawaii Broadcast Network. I'm your host Kaley Akeena, president of the Grassroot Institute. Well we all know that the Honolulu Rail Project is both over budget and behind schedule but today we have an expert with us who's going to be able to address that situation and tell you anything else you'd like to know about the rail. Her name is Natalie Iwasa. She's been my guest before and I really appreciate what this individual does for our community. Natalie is currently an appointee to the Honolulu Authority for Rapid Transit but in her capacity as a private individual she'll be sharing today what her personal thoughts are so she's not necessarily representing the heart but in in any case I think you may know her she's become well known because of her positions and her boldness and willing and her willingness to stand up and speak the truth. Natalie I so appreciate you being with us today Aloha and welcome to the program. Aloha Kaley thank you for having me. Well if we put everything into context we started talking about 2012 that's when the rail kind of took off and back then it was supposed to run from Kapolei all the way to Ala Moana. We estimated that it would cost somewhere between 3.5 and 5.1 billion dollars and would be completed by 2020. Now here we are in 2022. Give us a snapshot of where the rail is and just a status check. What is the condition of the rail at this point? Well basically construction overall is at 64 percent and you know sometimes we've heard that oh we're at 75 percent because we're at Middle Street but there's a lot that hasn't been done yet like the stations at the airport um guideway section so keep in mind we're about 64 percent complete um they're working on finishing up some of those stations there. The wheels and track issues you know some people may be familiar with that that has all been resolved so that's a good thing and they're working on their final checklist to be able to do the testing for the interim run so they have to have 90 days of no problems with their testing and then once that's done they can turn the whole system the the interim portion over to the city for their part in actually getting it running for passengers. Recently we had the recovery plan approved by the heart board I think a lot of people are aware of that and I know I'm sure we'll talk about that a little more but that plan has to go to the city council that has to go through a committee meeting and also a full council hearing so that offers people an opportunity to provide input and something that people may not be aware of is that because the system now is called what's truncated at the Civic Center the full funding grant agreement has to be amended so that will come sometime I imagine later this year but that's also another opportunity for people to provide input and then we have the estimated data commission that's March 2031 that's for the full line the full 20 miles 21 stations I think you asked for did you ask about hurdles as well well yeah as a matter of fact I was just about to ask that there have been lots of hurdles but there are some major hurdles perhaps standing in the way of finishing the project what would those be give us a an overview yeah so I think people are familiar with the Dillingham area that's really been a sore spot for the entire project you know when they went into there they didn't realize that the situation as often is the case with infrastructure on this island they have I think it was 13 utilities that they have to be aware of and the biggest two are the water and sewer so that whole area is still going to be a major issue you know they think that they have a lot of that worked out but there's still some stuff that needs to be done there the other kind of big area is the remaining funding so they truncated it at the Civic Center for just under $10 billion but the remaining section has stated often that it's going to be the most difficult and you can kind of tell by the cost because that portion along with the Pearl Highlands garages slated right now estimated to be $1.4 billion so that's 1.25 miles of guideway for a huge chunk of money so those I think are the hurdles at least as I see them well notwithstanding these hurdles Natalie and forgive me for the simplicity of this question but do we have a viable project does it look like this rail is going to be finished and up and running within a reasonable amount of time you know that's a really good question and so if you listen to what the board is saying to the director of the transportation services at the city level they believe that by truncating at the Civic Center and then beefing it up that section will be viable and I just felt that this was so ironic at the last heartboard meeting when it was stated that the Civic Center is going to have some BRT that's Bus Rapid Transit now for anybody who's been paying attention to this project you know that that was brought up eight nine years ago as an alternative to rail but they said no we can't do that so I just thought that that was really interesting so what they plan on doing is at that Civic Center having buses every six minutes kind of alternating for those going to UH and those going to Alamoana and beyond to like Waikiki so I don't know it's just kind of interesting the way that that all has come about well that's certainly a hybrid system now you mentioned federal funding earlier and federal funding has always been an issue with moving forward with the rail and it's also been part of the process by which government at the federal level has been trying to either incentivize or otherwise put a carrot in in front of the the heartboard the federal transit administration has held on to currently 744 million dollars in the balance right now why is it so difficult to get that federal money what are the obstacles we're looking at what are the challenges well so what the federal government is asking for and requiring actually is that hearts show that they have the funding available to cover the cost to go to what well Alamoana initially and and with this new plan to Civic Center and you know the last recovery plan was done in 2018 and then it was amended in 2019 because the FDA felt that the costs that were being used were too low so that plan included the P3 the public private partnership to get that last major contract from Middle Street to Alamoana so as you recall and for many others recall the city was working on that heart was working on that and it failed because those costs when it went to those bidders I think there were finally two that actually put in bids the costs were so outrageous so high that the mayor at the time Caldwell said we're we're not going to do this it's just too expensive so that was a major chunk of what the FDA had counted on in that recovery plan and when that didn't happen and then we had to turn over an administration and higher costs the FDA said wait a minute you can't do what you said you were going to do so show us now again through a revised recovery plan what it is you can do and how you're going to do it so you know they're holding on to that money because that's that's the only leverage that they have if they were to give that money to art you know there'd be no really no reason to follow through with whatever they say that they're going to do in that contract other than potentially down the line there could be consequences but that that's basically the reason that we're still waiting for that federal money now as you mentioned earlier heart has already has recently approved a plan to stop the rail about perhaps a mile or so before alamo on a center closer to the civic center can you give us a little more detail about that what went into the reasoning behind stopping at that point what was the deciding factor well the cost of the funding that was that was the major thing i mean you know when you project that you're going to have nine billion coming in and your costs are at that time we're close to 12 or more with the finance charges um you know then you can't you can't do it it's it's like trying to build a million dollar house and only having seven hundred thousand dollars you just you can't do it so they were forced into that situation and they did these things called value engineering and risk refreshes a lot of meetings with the fta a lot of meetings with the experts and the staff and trying to look at what could they change in the current plan to make it viable but you know cut down that cost so that they can build to where the funding will get them and along with that they also projected the the revenues you know that the g e t surcharge the transient accommodations tax the new county level transient accommodations tax they took all of these factors into consideration and came up with this proposal to stop temporarily at the civic center well there are other decisions being made with respect to costs as well such as most recently not to build the pearl highlands parking garage and that's caused quite a bit of commotion in the community how will that affect the project as well as the public sentiment for the project yeah that that's a big thing and you know really the cost for that garage is outrageous it it was three hundred thirty million dollars i think it was like two hundred thousand dollars per all and to kind of put that into perspective this is actually in the plan they had asked a contractor who recently built a garage on island i don't know exactly where but that cost was like thirty five to forty five thousand dollars per stall so you can see the heart's estimate for a pearl highlands garage is like four times as much it's just outrageous um so they had to take it out temporarily anyway they say and um yeah there people are upset about it um the millilani ypo neighborhood board sent in money saying hey don't do this you know we need a place to park when we bring our cars into town we want to be able to park and then take take the train um and then there were some other people who were upset about it as well the interesting thing about this though is that this is supposed to be a sixteen hundred stall garage and the impact that was stated in the recovery plan is only fifteen hundred boardings so my question during last week's meeting was you know if the impact is only fifteen hundred why are we building sixteen hundred stalls something doesn't jive there it just doesn't match up um so yeah there's there are a lot of questions with respect to that and the statuses that they're they're looking at it um you know personally it sounds to me like it's not a great place to build a garage because it's it's in a flood plain and um they have to build something they talked about some kind of aerial infrastructure I don't quite understand that technical part of it but to me it doesn't sound like the best place to build something like that well it sounds as though it's a very thorny situation whether it's built or not built you're going to have a lot of people disappointed as to what takes place and Natalie uh there are additional costs and we have to look at the funding I want to ask you a little bit more about that and what lawmakers are planning to do but but we're going to take a quick break and when we come back you can respond my guest today is Natalie Iwasa she's on the heart board but she's speaking in her private capacity today we'll return to Hawaii together on Think Tech Hawaii in just a moment thanks for staying with us this is a fascinating conversation we're having together on Think Tech Hawaii's Hawaii together with Natalie Iwasa member of the heart board although she's here in her private capacity we're talking about the current status of the rail project in Honolulu as well as where we're going in the future now let's get back to that conversation Natalie lawmakers have to raise another 1.4 billion dollars in order for the project to reach its completion according to the current projections what are they looking at to raise that money and and it's specific are they considering tax increases you know that's a really good question so what we've heard in the heart board meetings and I believe before city council as well is that we have this new transient accommodations tax at the county level potentially that could be used it is in perpetuity so you know that there's that but it's not a lot of money it doesn't reach 1.4 billion dollars per like way beyond the next few decades so that can't be the only thing they also talk about potentially getting some other money some other federal money not from the FDA but other sources and they haven't provided any specifics on that and then I guess you know there may still be this hope that the state could provide some funding although really that that's very realistic the only other place that I can think of is real tax and you know one of the concerns I have I know other people have stated this as well is that we still have to pay for the operations and maintenance so you know I don't think real property taxes will be funding construction itself because we're going to have that that money is going to have to be used for O&M so you know it's a really good question I'm sure that they're going to say while we go to the Pro Highlands garage we only need a billion and we are going to do this change and we're going to get it down to this but that all remains to be seen Natalie we were talking about the 1.4 billion and I assume we're referring to what it would cost to complete the construction you mentioned operations and maintenance that's a lot more as well my questions a little more general than this however we've seen cost projections rise and rise and rise over the last several years how confident can we be in the current cost projection that we've only got 1.4 billion left to go you know I I personally don't feel real comfortable with the numbers because of the history we the major contract we have is from Middle Street to now the Civic Center and we've seen time and time again how those estimates have been blown out of the water so if that contract comes in higher than what is anticipated or there's something along the Dillingham Boulevard with the utility relocation that comes up you know it's just going to really mess things up as far as the finances go so I just don't feel comfortable with the numbers and you know I've pointed out so many times in the past as well how the numbers haven't been consistent or just not correct so that's a that's a big concern for me I don't mean to put you on the spot Natalie but why is there such a lack of confidence in the numbers and there could be so many factors ranging from incompetence through fraud and so forth but just generally I'm wondering if you have any thoughts as to why it is that that we have had such difficulty in sticking with projections that that have been made for the budget well you know I think the project started out on the wrong foot as far as that goes because this rail project got funding authorized before a plan was complete and Caldwell said that in his testimony I forget if it was 20 you know 2017 he said that to the legislature we learned from the past and so this time we got our funding without having the planning in place and then not only that but the contract one of the contracts was let back 2009 before the full funding grant agreement was in place and that contract alone ended up costing $100 million more so you know we have this history of things not being done in the right order to the credit of the current staff they have told us that they've learned from the past but I think there are still a lot of unknowns out there we know that the city center is going to be more difficult just because it's a more populated place but you know that I think that just adds to the question about those costs and whether those numbers are realistic what would you say about the quality of transparency that the heart board has displayed as well as the administration of the rail you've raised some concerns yourself in the past how transparent has the rail been with the public well up until 2021 I would say pretty opaque actually because we learned when Laurie came on board that there was there were problems with those wheels and tracks I forget which issue came first but that was a known problem way before it was brought out to the public and so that's just one example I do think Laurie has been really pretty good about bringing issues as she learns about them or as Hart learns about them but there are still things that I think Hart needs to do in order to make things more transparent for example we had 25 plus alternatives that were looked at back in early 2021 and we've never had a public discussion on them so you know why not I mean help the public understand why we're doing this mocha shift and something else or the plan for the buses you know the plan is to create a lot of feeder buses and take away some of the express buses so why aren't we putting that out there so those people who are planning on riding rail understand that they're going to have to get on a bus off the bus on the rail off the rail on a bus off the bus you know I think those types of things are still not being discussed and I'm sure there are other examples that people can come up with Natalie going back to some of the funding options what are your thoughts about the assumptions that are being used with respect to the state general excise tax or the transient accommodation tax are these reasonable assumptions that that's really a good question and one that I brought up at the heart board meeting because as a CPA I've wondered what these assumptions are because they had expressed that this GT and then over the next 10 years or so is going to go up I forget what it was 800,000 or I forget the exact number but I'm like okay well so what are the the assumptions you're using and so now we know we're using the actual collections from 2010 to 2019 for heart on the excluded 2020 and 21 because of the COVID which is reasonable but in that time frame act one in 2017 reduced the state administrative straight of fee from 10% to 1% so we had a bump in collections of 9% just because of that and they didn't take that into account when they came up with this 6% it's not quite 6% increase in the GT over the next not quite 10 years but that period of time and so you know when when we know that something impacted the history of the GT and we're not taking that into consideration that for me is a big flag now the same thing can be said about the TAT or similar because what they did with that since there's not that much history on the TAT at the heart level they use the actual statewide TAT collection so for the same period but in that time frame again we had an increase I think it was from 9.25% statewide to 10.25% and that again was with the act one from 2017 so you have a full percentage point of increase that's feeding into those collections and you know that wasn't taken into account when they developed this projection I think it's like 9% over you know year over year that they expect TAT to increase the last thing on that that they haven't considered is bill 41 which for people who haven't followed city council that's the change of the restrictions in the short term rentals so you know theoretically we're going to have a lot less people paying into the TAT whether it's the state or the county at least on Oahu so these things haven't been put into that analysis if you will and my question is well you know why not and how can we how how can you be so confident the numbers are going to be what you say they are if you don't consider these things that impact the increases over the last 10 years well Natalie those are indeed some troubling concerns I wish we could keep talking but we reached the end of our half hour together and I just would like to ask you in closing is there something you would like to say directly to the public yeah you know I just would really like to stress that people should testify I get it people are tired of feeling like they're not being heard but it's so important it's critical that you keep telling your decision makers your elected leaders what do you think and I tell you it's going to stay on the record and it's so important so that that would be I think the most important comment that I can make Natalie thank you for your service on the heart board and thank you for being with us today you're welcome Kelly well this has been Hawaii together on the think tech Hawaii broadcast network my guest Natalie Iwasa is a member of the heart board talking today about issues related to the rail so glad you were with us I'm Kelly Ikeena until next time aloha thank you so much for watching think tech Hawaii if you like what we do please like us and click the subscribe button on youtube and the follow button on vimeo you can also follow us on facebook instagram twitter and linked in and donate to us at think tech Hawaii comm mahalo