 We're back. We're live. This is think tech and community matters and today we have Russell Hanna. You can talk about rail We're calling it a big week for rail. We got to sort out what's going on in rail so much is happening I've been coverage in the star advertiser and civil beat PBN. That's all around town But for muscle we're going to find out exactly what's going on. Welcome to the show Russell Yeah, thank you Jay for inviting me for think tech, you know today's my good subject for me the rail project as you know, I have like 30 years experience in transportation and planning being an engineer as well and Have retired from state DOT, which I was a statewide planner on the 1990 project, which I drafted all the Communication letters back then with Governor John Wahey, so I'm very familiar with the Situation with our transportation consultant right now as we speak. Yeah. Yes, sir and matter of fact I did represent Mitsubishi Mitou when they had the core systems contract and back then where we're going to build the train here locally and Have manufacturing here and we're going to do that the at the Milani Technology Park and use the local unions and assemble it and Deliver the train and on top of that we were going to train the workers then built electric cars after that So I kind of showcased it when we had the first Hawaiian auto show and I was able to talk to the Mitsubishi Mortars people in California and they said yeah, we can bring the Mitsubishi I the electric car from England It was a prototype to showcase for the first Hawaiian auto show and and I wanted to let the public officials and the people at the heart Who was involved with the rail project say hey? This is what they can offer after we built the train here We'll build electric car to meet the energy plan for a year 2045 being a fossil fuel So we had it all pretty good pretty good too bad Then we're kind of according to the plans, but as you know today at the legislature They're trying to revive the let's talk about what happened this week. I know Monday was the Senate hearing telling us what happened Who is there? What's going on? Okay? I guess as you know you read in the newspaper. It's been in the press as well in the news This there's a I guess they're going to try to wrap it up today being Friday I'll start in the beginning now. What happened on what is it the 20th? Okay, actually, you know when there was a there's actually there was a the Senate Introduced a Senate bill for which had a combination of increasing the funding source For either you go with the transit accommodation tax Which the hotel people in the terrace will pay and as you know the general exercise tax works with the local consumption There were majority be paid by the local residents here So what happened with the legislature when they had the press release with both the house and the Senate with rep speakers? Scott psyche in the Senate president Ron Cochie and they kind of agreed and they came up with a measure of How they're going to combine both the TAT and the general exercise tax like the transit accommodation They want to increase for 13 years and increase from 9.25 percent to 10.2 Right 5% increasing 1% of the TAT for 13 years, and they assume they're going to generate roughly about 1.3 or 1 Billion dollars on the general exercise they want to increase three years from from year 2027 to 2030 so that generates roughly about 1.1 So when you combine both the TAT and the general exercise you get about 2.4 billion dollars additional funds or whatever the heart has in their budget right now and If you look at their balance sheet, I guess there were shortfall of 300 million dollars Which they had to raise through their obligation bonds at the City Council past because they got to meet the Fresh show to go to the Middle Street as you know with their projection cost After they gave the contractor the prime contractor Simic Taylor and Grant which it used to be under Keywood Pacific But Keywood Pacific pulled out and they didn't want to bet on the third phase going from Pearl City or the Arizona Memorial site where Pearl Harbor is after the Loha Stadium. You can see the Viaduct being cut towards the airport and From that area Simic Taylor and and Grant got the contract and that was estimate about 640 billion million dollars and they started the work in airport area But to me what's the biggest problem is if you go with the new prime contractor the new prime contract that have to Re-educate their subcontractors. They got to buy new equipment. They don't even have the precast It's a real problem is they're gonna all the startup kind of experience That's where you're gonna double cost of It's too bad. So why did Keywood really drop out? I think the rumors I heard was because of like came in the press is that Because of the cost overrun and a change order the heart old Keywood $100 million and prior to that, you know the cart was always kind of tagonizing the Keywood same with the change order and the cost overrun They're taking up the advantage of the project So they're kind of not cooperating much and what happened was during negotiation time for the change order Keywood got kind of upset because the heart Board or the heart then wanted to pay Keywood the additional hundred million dollars, which they own from the cost Overruns in the change order. So that's the reason Keywood they wanted to get didn't want to pay the hundred. Yeah, exactly So they pulled out of negotiating on it or just say no, they just said no and they pulled out I would pull out for a hundred million dollars and they didn't get paid yet. Exactly I'm not sure what's what's gonna happen on the that side, but the legalities side But I think that's what we awarded the contract to a semi-catering fan for the first person lost some time on that I said, I can what's the problem from the third place that contract is rolling up to the middle street And it requires under the FTA's minimum operating segment under a locally preferred alternative that You got to go to the middle speed no matter what but now the FTA is saying that you got now with additional funding that you guys Gonna come with a recovery plan and the financial plan that they have to meet by September 15 That's what a legislature is always That's why the special session exactly at the end of at the end of August and beginning of September Yeah, because they have to meet the financial plan and state the management recovery plan They have to submit. So how does this affect option to a I'm not sure where that where that stands in all this It's kind of a hanging issue option to a is the one ground level, you know from middle street to downtown Save a lot of money But I think either technology is going to be different with you're going to retrofit some of the The third rail concept that's going to happen I don't think because you know you're still going to be trucked You know you're going to block traffic. They're on the fixed guy will elevate it You know, there's no in endurance in hindrance of blocking the passage or anything It's going to be on time on schedule. Yeah, and there will be no great option to a I don't think it's gonna happen Then you got to change the the EIS and everything and that's gonna boy delay There'll be another 18 months or two years Environmental impact statement, you know, even you do a supplement on that one I don't think it's because FDA prefers the fixed guy rail and elevated concept. Okay, so on Monday You said it was bill for and it's a special session, you know, and there was only one issue I mean, I know there were some confirmations And they did in fact confirm Jay Griffin on a PUC But mostly it was about rail. How do we get the bill for if it's only about rail? What about bill one two and three what happened? I think there were kind of ones that was they didn't include some of the trade-offs with the neighbor islands I know there was a even today when I was took a big concern at the legislature is that The state senators and the House of Representatives are not working together with the neighbor island county with the county council And there was a move now to get to tax the GT and maybe over the TAT affects the whole state Yeah, right and he's here. They're trying to make the GT extension Statewide or just a little actually they they wanted to do for statewide But they're given an option for each county to pass a measure in a county council So right now the statewide taxes on the GT is 4.5 percent that we pay in Oahu But if you go to the county, they only pay four percent Yeah under the rule, but but some of them pay like 4.2 and So you're saying they would have had to have Resolution or a bill by each county agreeing that this tax would come out of that county Well, why would they do that what's in it for them to increase tax on their people for a system that has no effect on that That's why the neighbor island Delegates or the representative than state senators against this bill because they thinking that neighbor islands not going to benefit They have to pay for the Oahu's mismanagement of the rail project. I can't imagine why they would agree. So I came up with a good measure of See if we can mitigate this and work together with because we're all together as a statewide Myself in a statewide planner, you know, I've seen the infrastructure of a harvest airports and highways on all the islands on a statewide basis So I know what the needs and wants of each counties and islands are like and it's not like Oahu Neighbor islands are having more trouble with the infrastructure needs and the revenue sources are like Oahu like we have 80% of Populations in Oahu. So we're a bigger player here. So I can see why the neighbor islands are all you know, kind of Not seeing what we are seeing in from Oahu. Okay, so what happened to that idea, you know, the idea of making statewide TAT That's probably easy because hotels are everywhere and they serve every county but also GET statewide, so how did that sort out on Monday? Well, I think today's gonna be the final vote How does it sort out on Monday? Monday it was there were, you know, the hotel people are against it I know the Hawaii Hotel Association, Hawaii Tourism Authority, their authority as well was there testifying and they're against it because they want to they don't want to pass the buck to The tourists already they're already paying but but if you look at from the corporate structure, you know As you know, the corporate tax is 35% and the corporations of the hotelers can have a lot of tax write-offs So I think from the federal tax write-off to the state tax write-off They're gonna see give a little incentive because they did increase the TAT Okay, so what came out of the what come out of the Senate committee? I guess it was a Senate committee on Monday What was the result of that bill for? I think the Senate Committee decided to pass the measure It was increasing TAT. Yeah, it was and not a statewide increase or was it a statewide increase? They're gonna leave it up to the TAT. There wasn't I think it was like 94 Million dollars is existing for giving it to three counties Kawaii Maui and Big Island and they were gonna give it 10 more Millions, so they're gonna get like 104 million dollars close to 105 To the neighbor and so they have to break that into three counties or then give them money out of the Yeah, so I'm gonna go back to the county. Exactly. It's a deal. Yeah, it's a deal So in other words, they're gonna get additional 10 million for increasing of The TAT. Okay, so it passed that way bill for on Monday. What happens since Monday? Okay, since Monday there have been none of I think, you know my hunch what I just observed today and what I heard from the floor Legislators going on right now exactly right now on a Friday afternoon Exactly it started 10 o'clock this morning and the Senate passed it by noon time and the house is still Debating on the floor, and I guess they're giving every legislator a chance to Rebuttal on it on the Senate. So what's being said? What does it look like? I think they're gonna pass it on the bottom line. That's what happened on Monday. That's gonna get I think you prior to the four I think prior to that that I think the deal was already made when Senate President coaching and speaker Scott Psyche came made a press release and they thought this is the best measure and Approach in this way. So they just have to go through the process right now the legislative process Have it three readings on both sides to pass the measure. So the hotels have settled down They're willing to take the TAT. I guess I think at least they shot their wad. They made their point and now this this legislature is ruling and The GT GT thing has worked out with the counties where we know how much they're gonna get back out of the money I think from the hotel's point of view what might happen is if they want to pass They don't want to pass the buck to the tourists they can lower their our rack rates and the wholesale price and Try to make up with it. No, they've been increasing rates. Yeah Some kind of Anyway, so I understand the legislature looking at them. It's a source of revenue This is so highly political honestly, so you think it'll pass. Yes, definitely. I think it's We do we do need some kind of measure by September 15th Satisfy the FDA. Yes. I that's what I remember when our Congresswoman Colleen Hana Boussa was mentioned She had some great insight about that and you know, she's our Representative from the congressional side with They have our insight to know you because she was part of heart and they got to be loving of good another thing is our FTA Director it's going to be changing. They're going to be rotating September sometime in the middle of September. So we'll have a new FTA What's what's the change going to mean? I mean different agencies different results, but this administration is pointing different kinds of people Yeah, I think from the secretary of transportation Len char You know, she's been pretty much behind the White House with Donald Trump So we we've been trying to it's going to be easy to get money from them going forward with this change What do you think? I think you know, as long as Hawaii can maintain status quo and obtain federal funds I think we're in good shape. That was one of my suggestions to the state legislature Wouldn't the changing of the guards with when Donald Trump came that we we don't want to bridge the gap there and you know, make sure that Maintain our federal funds here because state budget requires like we have like 20% of all the state budget is federal funds Okay. Well, we've looked at the legislature this week. We've seen the two major hearings We've heard about the players involved. We've heard the likely result to follow it up with you And we're gonna you know, we're gonna close this show now And we will come back in a minute and do another another segment on what it means and how it looks going forward from a Business point of view from a regulatory point of view from a heart point of view. So thank you very much Russell We'll see you in a minute with our next show. All right Oh