 I'm Tim Apachella. In today's Moving Hawaii Forward, we will look at the topic that is on the front page of the Star Advertiser almost every day now. How to fund the rail project shortfall. The 2017 state legislature ended the session without coming up with a plan to address Mayor Kirk Caldwell's request to fund $3 billion shortfall for the rail project. His original request was to have the state extend the half percent general excise tax without having an end date. This didn't happen. And now voters are saying, why didn't this get done? Where is the leadership to come up with a funding strategy or any kind of funding strategy? Voices on both sides of the rail issue are getting louder. Some say it's time to kill the rail right now. Many others say complete the rail as planned and get moving on it right now. A third group says stop the rail at Middle Street and allow a bus rapid transit system to take commuters into Alamoana. No matter what position one takes on the rail, one thing most parties can agree on, make a decision. Our guest today has recently submitted an editorial to Honolulu's Civil Beat to address this exact topic. State Representative Bob McDermott represents the voters of District 40, which includes Eva, Eva Beach, Eva Gentry and Iroquois Point. Representative McDermott also sits on the State Legislative Transportation Committee. Representative McDermott, I want to thank you very much for taking the time and join us on this exact issue. Hey, thanks Tim. Thanks for the opportunity. It's been in the paper. Well, it has. Where would you like to start? Well, just a little bit. You came a legislator in 2013, is that correct? So I have broken time. I was in the 90s for three terms, ran for Congress unsuccessfully and then I was out of office for a decade and an open seat came up and some people asked me to run. Now when a politician says people ask me to run, usually the other person asks him, it's a guy in the mirror. I think you should run. Yeah, I think so too. But actually, people didn't ask me to run. So I got back into it. So I came in in the middle of the rail situation. I wasn't around for the selection of the route or the criteria or maglev or steel on steel. So I come in the middle of it and said, OK, here's your options. I'm glad you clarified that point. Yeah. Well, I didn't. Yeah, no. You came into it in the middle of it. So before I get to your editorial, I'd just like to have you describe the atmosphere, the political atmosphere over this very issue. I hear it was very contentious. It was very combative at some points. So the truth of it is that the House leadership has a personal dislike for Kurt Caldwell, because when Kurt Caldwell was in the House with Calvin Sey, he was a majority leader. So the people now in charge were on the outs in those days. So what that means is they didn't get their bills or they didn't have any influence. They weren't committee chairman. Now those people are in charge. And Calvin Sey and his group are out on what's left of it. So it's payback time. And you shouldn't make public policy based on personal likes or dislikes. At the expense of the voters. Yeah. Really. It's chicken do-do, shall we say, chicken poo, stuff. That's a very big, real part of it. Personalities and egos are down there. You know, I say you have 76 egomaniacs in that building. And where's the adult supervision? I can assure you if Dan and Oey was alive, we wouldn't have turned without a decision. He would have made a phone call and said, you guys get together and figure this out. It's an embarrassment. But we don't have that. EGA is a very nice man, but he is not a leader by nature. He is a creature of the legislature. He started 35 years ago, appointed to the state house, been in the legislature. So he believes based on his actions, and what I hear is that the legislature should work their will. Well, we need leadership to step up and say, this is what we need to do, guys. We're going to send a president, a house speaker, myself, the governor. We're going to lock ourselves in a room. We're going to order pizza. We're not leaving until we figure it out. Real simple. Because each month we delay costs $10 to $15 million in contracts, increased costs that we're not. So today, if we could sign a contract, we lock in the cost. We're not signing contracts because we have no money left. We ran out of money about two months ago, if you will. So they can't lock in prices. So now the prices are going up, $10 to $15 million a month, all because of egos and personal dislike. Now, do we have money for progress payments? We have money right now to go to a certain point, which is close to Middle Street. But beyond that, we can't. We're out. Right. And again, this is a city project. So I'm kind of operating at the 20,000 foot level. I'm not down deep in the inertia of it, or the guts. To what extent did your committee get involved with all these topics? So we passed a bill, I think it was a 20 or 30 year extension in the GET. It was a good bill. It had some safeguards in for due diligence and things of that nature, monitoring the progress. But it goes to finance. And that's where Sylvia Luke is. And Sylvia Luke and Scott Psyche are the power of the state house. And Sylvia Luke and Jill Takuta are friends. And so Takuta said, we're only going to give you the skin back. And Sylvia Luke said, we'll do, what, it was a one year or two year extension, something like that. So that was going to be the... The skim's 10%, correct? The skim's 10%. Yeah. Which is interesting. I want your listeners to hear this. The skim is a couple hundred million a year since the project's been in inception, so over 10 years. That all goes to the general fund. So let's use a round number. It's low, but let's say a hundred million. A hundred million every year goes to the general fund. That's from Oahu taxpayers paying the GET surcharge. That hundred million, which is a low number, by the way, now is distributed to the entire state. So Oahu is directly subsidizing the neighbor islands. Now we already do that in the general fund budget. Anyway. Anyway. Now this is even worse because now we're penalizing Oahu and putting this extra burden on for extra neighbor island subsidies, which is lost on every corner. It's interesting because I'm hearing from folks that live on the big island and they're saying, why are they taking away money that would be dedicated to the island of Hawaii? Well, that's the way they look at it. Yeah. That's the way they look at it. So everyone's looking at it a little bit differently. And so the neighbor island senators were always supportive of the train because they're getting the slush fund. There's more money for them. But it's the Oahu guys who are getting hammered on it. And so reduce the skim to 1% is what I say. And stop that nonsense. First of all. Well, I want to get to the editorial specifically because when I read it, I was, it's rare that you can get a very clear statements that are not ambiguous, direct to the point and have a direct message. And that's what I was appreciated about your editorial. I mean, not agree on all the points you made, but it was a breath of fresh air to see this posted in Honolulu Civil Beat. Well, thank you. I was a Marine for eight years, four enlisted and four as an officer. You know, you have a mission you've got to accomplish it. Of course, that's 100 pounds ago as many years ago, right? But, you know, this is what we've got to do. So let's get there. And the dirty secret, Tim, is that this thing has been three quarters completed. We've got four miles to go. There are four most expensive months. But four miles to go to get to Albuanen, OK? There will be a funding mechanism. Stop the nonsense. Stop the bull crap. I'm going to get to funding strategies a little bit later here. The sky hasn't fallen. Finish the damn thing. Oh, and by the way, everybody knows. Everybody knows this is a separate topic. But to make it work, it's got to go from Alamoanen, another two miles to the University of Hawaii. It's got to go there. Otherwise, it's going to be a mess. It's going to be a mess. It's going to be a mess. It's going to be a mess. It's going to be a mess. It's going to be a mess. It's going to be a mess. It's going to be a mess. Two miles to the University of Hawaii. It's got to go there. Otherwise, kids aren't going to take it. They're not going to go to Alamoanen. What you do know from a plan is that point that they have to retract back out and then go up to University of Hawaii. Well, they could go down Kapiolani, too. They could go out great. But that's another story. That's another story. That's another fight for another time. But that's the plan. Everybody knows it's got to go down there. So get to Alamoanen. 60% of the folks. There was just a poll done. PRP just did a poll. It's just news for your folks because it's not public yet. 60% of the people say finish the damn thing. As planned? Finish it down Alamoanen. Okay, but with an elevated system? Yes. I find that really an incredible poll. The numbers I got were 45% say finish it. 45% say continue on. Extend the GT. 49% say stop it. Right. But when you ask, okay, should we finish down Alamoanen? 60% say finish it down. I think most people agree. It's how we go about doing that. We're going to talk about the challenges for the last four miles. Well, I'll tell you, as a Republican, you say that 50% doesn't like it. 90% of that 50% are Republicans. My party. Right. They're all living like I do. And they're the ones that say don't do it. So, Tim, what is the solution? That's the thing. You get all the naysayers. Grumble, bitch, moan, convention, all this nonsense. Well, take it down. Running it great. Stop it. Put jitties on top of it. Make it a bikeway. Okay. All right. Well, here's the reality. We're three-quarters away. Yeah. I think a big issue is it's not so much the concrete and rebar issue. It's how this thing came about and what a lot of people feel were deceptive practices on selling this to not only the state legislature, the city council, but ultimately to the voters. And I think that is now starting to gear or rear its ugly head into this process. I mean, there is a credibility issue here. Absolutely. That heart and the mayor's office is having an issue with. In fact, you know. Well, you did government work, right? I have. I'm sure your thing was always under promise and over-deliver. Right? Okay. You're going to force me to go right to a quote here by former mayor, Willie Brown of San Francisco. Okay. Remember Willie Brown? Yes, he did. Well, he left office and then he had his own little column in the San Francisco Chronicle. So, on July 28, 2013, this is what he said. And I think it applies to Honolulu, to the state of Hawaii, like nobody's business. And ultimately to every jurisdiction in the nation. But he said, in the world of civic projects, the first budget is really just a down payment. If people knew the real cost from the start, nothing would ever be approved. He said, the idea is to get going, start digging a hole and make it so big, there's no alternative to coming up with money to fill it in. Well, that's Willie Brown, right? Well, but that's how this one looks to be, is that, for one thing, rails never start from out in the farmland and come into town. They start from town and work their way out. Yeah. There's a reason for that, I believe. Like I said, I wouldn't around them. No, you weren't around. Exactly. So, I don't take responsibility for that. Yeah. But I think that's the issue that is causing the quagmire, is the credibility of numbers and the credibility of how this thing was sold. Let's look at what Mayor Kirk Caldwell said when he first pitched this idea to the legislature in February 1, 2017. He said, I think we're having a harder time than two years ago. And it's all based on the fact there's no trust the numbers given have changed dramatically. Well, that's another statement. Yeah. And history now is proving itself right, because we're now in June. I tell you what, I would support a complete financial audit going back to the beginning of the project to this fiscal year. I think that will go a long way to restore public trust. I think that's a great point. And I wanted to ask you about that. That's a great, great point. I think also you would need also a management audit, too, because as you know, there are two specific different things. But there is no public trust. And I think local people feel, because I married to a local girl, and so I live in that world, somebody's making money on this. Somebody's getting rich. Somebody's pockets are being lined. And I think the voters are now realizing, yeah, who is that? Who's making the money, bro? Yeah. Open the books. Now, Hart does publish their stuff on the internet, but nobody reads it. I think they should be more transparent in an aggressive way. Advertise it on Facebook once a month. Put your financials out there. And this is where we're at. And pay 100 bucks. You can saturate the island on Facebook. Here's the Hart Financials, so people can see. Because they're not going to go to the Hart website. Right? So a financial audit. How long would that take? Oh, shit. Sorry. That's OK. A year to 18 months, probably. OK. But that goes against your point that every delay costs money. No. So you do financial audit from 2016 back to the beginning. Mm-hmm. You keep moving forward. Yeah. That's a financial audit. So you see where the money was spent. OK. I think what also you have, Tim, is if Frank Fosse were mayor, if a contractor made a mistake, they eat it. They have arrows and omissions and shoots. It's not happening here. What we see as contractors make a mistake, we see change order. Yeah. Well, that thought, I'm going to go to commercial break. I'm Tim Appichella. This is Moving Hawaii Forward. We'll be right back. You can be the greatest. You can be the best. You can be the king. Come back to your chest. You can be good. Talk to God. Don't bang it on his. Welcome back. I'm Tim Appichella. And this is Moving Hawaii Forward. We're having a discussion about rail shortfall funding and how we get this rail done. And I'm here with Representative Bob McDermott. You're the commercial break. Yes, sir. You mentioned an audit. Yes, sir. And I think it's a wonderful idea. And as we said during the break, once and for all, this audit would either silence the opposition or confirm their suspicions. Right. The complete financial audit, and you mentioned it, will it take time? Well, it won't stop the progress of the project. So you go from 2016 back to inception. And you identify, was there misfeasance, malfeasance, incompetence, all these things. And you just line item, because there are people who think there's theft going on. Literally, I saw Randy Roth, I think on this, with Kaliyakina. Called it a fraud. Fraud. That's a legal term. It means theft. Yeah. And he was serious about it. So he believes that there's theft going on. So if a guy of his stature believes there's theft going on, then we should have a financial audit. And I'm happy because, you know, I didn't steal anything. Let's see what the heck's going on. Right. And the other one is the management audit. That identifies processes and workflow of a major construction project that, quite frankly, we don't have the expertise. And we were joking off-screen that the biggest project we ever built was a bridge over IA Stream, right? So of course there's a learning curve. And of course there are things that we're doing that probably weren't done right, certainly in the beginning. I think the new guy, Murthy, knows what he's doing. But Grubowskis, obviously, why would we hire a guy who's famous for the big dig? Well, I guess he had experience, but the experience wasn't the best, right? Because the big dig was a disaster. It was a big dig of money. It was a big disaster. Well, it was Mary or Willie Brown's point about digging a big hole and just filling in with money, you know. And to finish it. Yeah. But he, you know, he had some experience, but there's not a lot of guys who do these projects. But I hear Murthy is a good guy. Not only maybe financial shenanigans, but I think, again, the timing of this inertia is finally rolling up to the front of voters' noses. Because, you know, first, Mayor Hanaman, you know, basically promised new jobs. We're going to have 10,000 new jobs. Well, barely we have 978 or not even 1,000 new jobs. And a lot of those have been, you know, from people from the mainland. They're not necessarily local jobs. So, you know, promise number one wasn't fulfilled. Promise number two is, OK, we're going to have ridership. And that is a promise that is still a glaring, glaring... There's nobody riding nothing right now. Good point. But I think the projections of ridership is a sore, it's just a sore scab on this whole project. And we're going to talk about that in just a little bit. And then we said, OK, well, if it's not new jobs, if it's not, you know, easing congestion the way we think it's going to be, then let's find a new reason. Oh, it's TOD, the Transportation Orient Developments and the prospect of affordable housing. You're also on the Housing Commission. Yes. Committee, right? And I don't know if this comes into your committee or not, but this promise of TODs is way oversold. Well, let's talk about that for a minute, if you will. So, you asked the mayor and my colleague, Gene Ward, from Hawaii, guy says, why aren't we selling the development rides? We're selling them. Well, the mayor's response is, well, we don't own the land, which is true. There's a way around that. You can sell transit-oriented development rides. So, you break it up into zones and you sell the rides in those zones, the city council would have to decide what they want in particular zones, right? So, if you want an apartment building, say, in Evil Lay, I'll sell you the development rides to a 30-story apartment building in Evil Lay, Transit Zone 1, OK? I'm going to sell you those rides. You don't own any land yet. You don't have to own any land. It's like selling the air rides. It's an option. Yeah. It's selling the air rides above your house, right? You're familiar with that. Most people aren't. But you sell this option to develop. So, now the city can get revenue. So, I own the option to develop this housing apartment. Now, you own a grocery store down there. I come to you. I say, look, let's do something together. I own the option and we make business. Right. Right now, they're not doing that. That's creative. That's thinking out of the box, selling these TOD rides. We can do that now. I will tell you, I know that the next area that's going to be built up is the Kalihi Corridor, Evalet. Kakaako, the explosion of growth over there, is due to the train because that's the end point. But also, we didn't capture anything benefitting the state. So, the state increased, or the city increased the value of these properties with this line. And because it's HDDA and it's in the state corridor, we didn't charge any TOD rights fees. Right. We didn't capture it. Well, that goes to why developers love TODs because they think, A, I'm going to get some kind of either explicit or implicit subsidy. And B, when I want to construct this thing, I expect some leniency on my permit process. Well, yeah. And so, you know, that's an expectation of developers going, yeah, there's a given take on that. But it's certainly not necessarily profitable to the city or the state when it comes to these things. Well, so far, they haven't captured anything. Right. Exactly. So, your point is well taken. They haven't realized the revenue available to them in this TOD development. And that's just because they think inside the box. But if you look at that corridor, Kalihi, all the way to Waipahu, it is dilapidated where the train runs. I mean, I think I live out on the West Side, so I'm looking at Waipahu, the Pupus. You have a 1962 strip mall that runs basically the whole damn way and then you have these three-story walk-ups. In 20 years, they'll all be gone. Right. They'll be raised. And where those three-story walk-ups are, a half mile from the ocean, there'll be 10-story high rises. Best and highest use. With ocean views. Right. And young people will be able to afford condominiums where they can build equity to buy an entry-level condo to build equity so someday they can buy a home. And he's son of a little like you. Yeah. Okay. Okay. Well, I'm going to get back to, again, these things, you know, what the rail was or wasn't going to do is rolling to the mentality of the public right now. Yes. And I think the one that sticks out there, like a sore thumb, is the ridership projections. Okay. And I want to just take a quick look at some numbers here and see if we can get this thing pulled up. Apparently not. Okay, so. Such is live TV, right? Just because I knew that could happen. So what you see here is all the cities here that have rail projects. And as you'll note, the one that has a ridership projection of over 100,000, which is Honolulu at 116,000, we only have a million population. And so you look at San Diego. And you look at San Diego that has over 100,000. You have Portland over 100,000. And the bottom line is you'll say, well, they're double, triple the population. So why has Parsons Brinkethoff stuck to this number, not budging off this number, and insisting that we're going to see 116,000 trips per day? So it's this point that I'm making that these projections are just completely unrealistic. Let's just take a look at San Juan. Now they had estimated 50,000 trips per day. It's taken them 11 years to get to 32,000. At best, our critics that you may or may not know, from Los Papadores, a lot of, you know, Yeah, my buddies. Yeah, all your friends, good. No, they are. Good. Well, then you know from Pato's position is we're at best going to see 50,000. 45,000 to 50,000 at best. And it could take years to get there. So my point is this. If we're trying to, you know, say that this is a new project going forward, we're asking for an extension of the excise tax, and we're moving forward with transparency and sincerity, then why is these numbers still hanging out there like a bad ornament? That's a great question. So I can't answer these in particular. I can't answer these in particular. But if we compare it to San Diego, because they're kind of close, San Diego is triple our population. But San Diego is spread out over literally 100 miles, right? 100 square miles. 80% of our population is in 20% of the landmass right along the coast, the corridors. We have a fantastic bus ridership. The bus, by the way, the bus is subsidized too. They don't make money. No, they don't. But the bus is full. Every, you get rush hour, you can't get a seat. We have a different mentality in this state, more of a socialist, co-activist mentality under the surface, I think. And people are happy to ride on public transportation. I think you're going to see... It is heavily subsidized by tax dollars. The highest transit property is probably King County, Seattle. And the best they got on the fare box was 20 cents to the dollar. And that's one of the highest in the nation. So most transit properties are operating at 0 to 5 cents recovery. So it is almost 100% subsidized. We have a great bus system. People ride the bus. I think that will converge into ridership of the train. Because people are going from the west side, straight shot downtown. That's where they work. Ever Beach downtown. So someday when it goes to university, my kid's son drives to the University of Hawaii right now. Gets up at 430. He has to. But if he could take the train, and they drop him off right on campus, he won't have to worry about parking. Because once they get down there, those poor people in those neighborhoods, there's no place for parking, because all the college kids are parking all over on all the side streets in Minoa and all over the place. It's a nightmare. I talked to a couple of your constituents on the show months ago, and they said, don't hit the road by 430. Forget it. If I hit the road by 6 o'clock, it's a two-hour one-way. Well, if I hit the road at 6 o'clock, it's going to take me an hour to get to the Pacific Club from Ever Beach. It has taken me upwards of an hour or 45 minutes on occasion. I was late for some important meetings. I mean, it's embarrassing. I left my house at 6, guys. It's quarter of 8. It is embarrassing. But I think all the issue is, you bring up these points, but the issue is, okay, here's where we are. We spent, let's say, $10 million already, or $10 billion. We're going to be at $10 billion. We're at $10 billion right now. $10 billion is a sunken cost. It's gone. Right. We can do the financial management and see the misfeasants or incompetence and stuff, but it's gone. You're saying it's history. That's old history. You and I are sitting here. What's before you and I is a project that's three-quarters of the way done, and we need to get to Alamoana. What is the way to do that? And I'm simply stating, with all the courage in the world, maintain the status quo. That's all I'm saying. And you're saying it requires courage to say that. It does require a lot of courage. And I tip my hat to you on that. Nobody else is going to say it. I'm like, the governor's got to come out and say, we've got to finish this damn project and move forward. And the people would follow him. Okay, so we're running out of time. What's the point? What's the financial pain? Where is the bridge too far as far as what this thing costs? Is it $13 billion? At what point do you even say, I can't support this anymore? If you extend the general excise tax, it's never going away. So I don't think of it in terms like you. I think once we've built Alamoana, if that's where it ends, then that GET has to be used to operate it. That's a whole other story. That's $100 million a year, right? I'm being honest with you. It's not going away. And he's a politician, he's running and that's it. And Caldwell's got to figure it out himself. But he's not figuring it out. It's not going away. Because the solution is we raise property taxes. And my folks in Ewa Beach, where our home average is about $5,000, $500,000, we're going to see maybe an $80 or $180 increase in our property taxes. You out there in Hawaii, where the homes are $2 million a piece, are going to see a $1,000 a year increase in property taxes. And all of a sudden, you're going to get on the phone. Well, it'd be a lot higher if it all goes to property tax, 28%. Yeah, it's going to be there. It's going to be on a $750,000 house. It's going to be over $800 extra. Yeah. So we're running out of time. Your homes are $750 in Hawaii. There are two million for just a cent. By the way, I live in a condo. I'm thinking of G. Ward. That's all we have for today. I'm Tim Appichell, moving Hawaii forward. And I want to thank Representative McDermott for joining us. And we'll see you in a couple of weeks. Aloha.