 Welcome 11 o'clock Rock. Randy Roth is a member of the faculty of the William S. Richardson School of Law at UH Manoa. He was one of the principals in the broken trust articles, you remember that, that led to the reform of the Bishop of State. Since then he's been an active member, an active person, an active citizen on a number of other public issues, especially now including rail. He joins us this morning to discuss his views and an article speech, a speech article he recently wrote on what we need to do about rail, depressing problems. So far the biggest public works, the most expensive public works project the city or state have ever undertaken and we need to face up to it and make intelligent choices to avoid a profound and continuing catastrophe. There are implications of huge delays, corruption and cost overruns in the many billions, a cost to our community, a cost our community can never, never really afford, not now or in the future. There is great danger in not addressing the issues presented at this point in the project. Randy was a plaintiff in a suit five years ago to stop rail. That didn't succeed. He says he's not biased. We're going to ask him about that. But he has his views, which he recently expressed in this article and speech regarding our options in the increasing complexity of the issue. We're very interested and honored to have him here to express those views. Welcome to the show, Randy Roth. Are you really impartial? Well, I think if I have a bias, I really, really like public transportation. I think a city like Honolulu needs a first class public transportation system that's reliable and convenient and clean, safe and affordable. Affordable to people who use it and affordable to the community that pays for it. Back in the 1970s in my youth, when I was a CPA by profession, I commuted by bus. In fact, my wife and I met for the first time on bus number six downtown Denver. So I really in all seriousness feel strongly about the importance of public transportation in Hawaii and specifically on this island. We are pursuing a rail option, what's called elevated rail. And I think it's the wrong choice for us. It would have been by far the most expensive capital works project, even if it has stayed on budget. It's way over budget and every indication is that the increases haven't stopped that it's going to keep on going. And there are a number of other issues that I have with it. Specifically right now, the FDA has said, look, there's no way you're going to be able to finish this project or come close to finishing this project on the current funding that's going to be available to you. So the FDA has said you're going to have to submit a plan by the end of April that tells us what you're going to do. And then we need to decide, the feds need to decide whether to continue to give you money or to not just stop giving us money, but to take back what they've given us so far. Footnote, footnote. We're going to have a new president in April. How is his views going to affect that decision? The short answer is nobody knows. I think because it's a new person coming in, Donald Trump obviously is less predictable, I think, on a lot of issues than most incoming presidents would be. But for a number of reasons, with a new administration, there'll be a new secretary of transportation, a new FDA, that's federal transit administration administrator. I think they're going to take a real hard look at this. The city has submitted what they call an interim plan that says we prefer, we being city administration, and when I talk about the city that includes Hart, the semi-autonomous group that's directly involved. The city is saying we want to pursue what it calls plan A, which is to get the legislature to give us the money we need to finish the project that was originally designed. It would take way more money than what is currently provided for. Plan B, which they have in the interim plan, is to stop short of Alamona Center. The Middle Street solution. Maybe Middle Street, maybe downtown, maybe include the stations that have been planned in between, maybe delete some of those stations. The idea would be we don't have enough money to do what we want to do, plan A. So we're going to have a plan B that will accomplish as much as we can accomplish within our means. What I'm calling plan C is, look folks, a lot has changed over the last few years. We need an honest, objective, alternatives analysis, a cost-benefit analysis so that the people who are making these decisions, the legislators, and deciding whether to extend the rail excise tax will have a sense for how much more money are we talking about for plan A. What are the implications of plan B on ridership or whatever? And plan C, I think once they start looking at that, they will decide that to convert the guideway that's been built for rail, to convert that to use by buses, and to take what would be a huge amount of savings and expend it in ways that actually reduces traffic congestion. I think that's what they would prefer. I think that's what the FDA will prefer. But until that honest, objective, alternative analysis is done, nobody... Nobody knows what it's going to cost. So you're interested in cost. I mean, we're not here to revisit the old decisions and all the claims of deception by the Hanman administration, what not, getting us through in the first place. We're here to look at a snapshot, figure out where we are, look at our options, make good choices from this point forward. And that's the essence of your article and I suppose the speech you gave on December 5th. Yes, that's what makes this particularly timely is that we've had these skyrocketing costs. What's also timely is that there are going to be bills, if not already, in the legislature calling for the increase, even the indefinite increase of the surcharge on the gross excise tax. Right. The latest proposal that's been tossed out there to get some reaction from Willius Farrell would make permanent that half percent extra excise tax on Oahu just for rail. And instead of the state skimming 10 percent off the top as its fee for administering... Which has been the case up till now. They would take a third off the top, which just makes an already questionable situation from a constitutional standpoint beyond questionable. In other words, the tax foundation of Hawaii has argued, I think very correctly, that if you tax just the people on Oahu, but a big chunk of that is in effect going to be benefiting the people in other places. There's a real constitutional issue with that. So the legislature is going to have to make some decisions. The specific proposal right now that people are talking about is to make permanent that half percent increase in excise tax. And all these big numbers, I don't know if you have that graphic ready. We have the graphic with the numbers, otherwise we can read them. Back in 2006, here's a headline actually when Mufi Haneman first started talking about the cost of rail. He was at $2.7 billion, but I couldn't find that headline. I remember it though. I'll be your witness on this. So he was looking at $3 billion and then if you go to the next graphic, this is a recent headline that now we're looking at $9.5. I actually think it's going to be well in excess. Plan A would be well in excess at $9.5 billion. But let's just assume that the cities finally got this nailed down. They've increased the estimate many times. Let's assume they finally got this nailed down at $9.5 billion. The question is, what does that mean? That's such a big number. So what the Tax Foundation of Hawaii did in their way, and I've reworked it a little bit for purposes of this particular conversation, how much would an average family of five have to pay to finish rail to pursue Plan A, if you will? And just to give you a starting point, when you do the math, which is pretty simple, so far the excise tax, the half percent excise tax, has raised $2.1 billion as of the end of 2016. If you allocate that to a per person basis by dividing it by a million, there are about a million residents, slightly less but about a million residents on Oahu. And then you take out 30% because directly and indirectly, tourists, non-residents, pay a significant chunk, either directly because it's earmarked on their bill or indirectly because it gets baked into the cost of goods and services in Hawaii. So if you take out that 30%, leaving only the 70%, that residents end up paying, and multiply it by five, because we're talking about a family of five, already the average family of five has paid over $7,000 for rail, $7,350. And if you say, yeah, but it's mostly paid by rich people, the excise tax is notoriously regressive. You know, percentage-wise it's more burdensome on low and middle income than it is on high income. So already over $7,000, but here's the kicker, here's what I prepared just for this conversation. If you assume that this is going to cost $10.8 billion, which is the upper bound number that the FTA has been working with, I think it's going to be more. Two years ago the upper bound number was $7.6 billion. But if you just use that and go through the math that I've just gone through, the additional cost from where we are now to pursuing plan A, building at Dolomona Center, the additional cost for each average family of five is going to be $25,025. Now again, it's $9.5 billion or $10.8 billion, or we've got these billion-dollar numbers that we see in the headlines. Can I footnote to say that Parsons, Brankerhoff, the same contractor, built the Boston Big Dig project? Yeah. The numbers were multiples of the original estimate. In fact, they did the cost estimate and the ridership estimate for the last elevated rail system built in the U.S. and U.S. territories. And their cost estimate was off by about 80%. Their ridership estimate was off by 74.9%. And those are the consultants that did our initial estimates. The cost estimate, we have some hindsight. We can see that the original cost estimate was way off. Maybe it was incompetence, maybe it was just, who knows exactly why, but it was way off. I think ridership is going to be way off. If you look at what's been projected for ridership of a PLAN-A rail system on Oahu and compare it to ridership in comparable places, comparable systems, no other place that a light rail system in our system is elevated, which makes some people think heavy rail, but smaller cars. So it's comparable to a light rail system. No city with a light rail system has a line that has achieved more than 38,000 average weekday riders. Our projection for Oahu is 119,000. Lots of luck. And Mufi Hanuman promised 10,000 new local jobs, so far it's slightly less than 1,000. And I could go on, but the point is there are good reasons to be skeptical not only about the cost estimates, but a number of other things that we were led to believe were a part of rail on Oahu. And that's why I think this honest, objective, alternative analysis is essential. Before we've spent that additional $25,025 per average family of five. So we take the midterm break here. I'd like to ask you what that means to a family, because it seems to me that it's off the top. In other words, your earning and your net of taxes disposable income is X dollars. You're paying that $25,000 out of your disposable income. That's what happens. Yeah, the bulk of excise taxes that are incurred by you and me and the average family of five, we don't see. It's not part of that half percent that gets identified at the cash register. The bulk of it is what gets baked into the cost of all goods and services. So it's an inflation of everything. Yeah, excise taxes are actually paid by businesses. They're the ones that file the return, pay the tax. Some of it they pass on at the cash register to consumers. Most of it, we don't see, is just one of the major reasons why everything costs so much in Hawaii. So the burden is the same. You know, whether somebody takes your pocket from behind when you're not looking or takes your wallet from behind or right here holds you up and takes... Either way, the wallet's gone. So the burden's the same. And when we get back from the break, I want to tell you that even if Plan A gets completed, there are huge costs that the city has not said one word about where the money would come from to pay those annual costs after rail had been put into place. And that pencils out to $700 per year for an average family of five for the rest of that family's life. And it gets worse. We're going to take a short break so you can take a deep breath. And we're going to come back and hear the rest. Hey, how you doing? Welcome to Hibachi Talk. My name is Andrew Lening. I'm your co-host. And we have a nice program here every Friday at 1 o'clock on Think Tech Studios where we talk about technology and we have a little bit of fun with it. So join us if you can. Thanks. Aloha. Aloha and happy New Year. It's 2017. Please keep up with me on Power Up Hawaii where Hawaii comes together to talk about a clean and just energy future. Please join me on Tuesdays at 1 o'clock. Mahalo. Aloha. My name is John Wahee. And I actually had a small part to do with what's happening today. Served actually in public office. But if you don't already know that, here's a chance to learn more about what's happening in our state by joining me for a talk story with John Wahee. Every other Monday. Thank you. And I look forward to your seeing us in the future. I think we're back with Randy Roth, Professor at the William S. Richardson School of Law, and what I call it an active thinker, a public thinker, a citizen journalist, if you will, and what's going on with rail. My wife says I have an overdeveloped sense of justice. Good. You can't have an overdeveloped sense of justice. You know, I just think rail has been so wrong from the beginning, and especially with these most recent developments. To me, there's been deception. The literature calls it strategic misrepresentation. To me, it's just dishonesty. And when somebody sitting across the table for me is dishonest, then that's one thing. When it's my government, when elected officials, appointed officials that have cloaked themselves with the power of government, when they are intentionally dishonest, it seems to me if individuals in that community don't stand up and say this is wrong, then there's something wrong with that community. The whole system, to that matter. I think so. Let's go to your slides. Randy has some very interesting slides used to show us how this works. Yeah, this first one, this is the corner of Bishop, which is running from left to right, and Nimitz from front to top. And this is what it looks like right now. I'd like to go to the next slide, which is what it's going to look like when rail gets there, if it gets there. You may say, well, wait a minute. I've seen the city's renderings, and they don't look nearly so ugly. They don't look nearly so, you know, obnoxious. This rendering was created by the local chapter of the American Institute of Architects, and they were so concerned that the city's renderings were not fairly depicting what rail would look like that on their own dime they created some renderings, and I've got just several for you. They say, actually, it's going to be worse than what this rendering appears to look like because at the time they did this, the plan was to have columns that were 6 feet in diameter. It's since been determined they have to be 8 feet in diameter, which if you remember your math from school, that increases by 75% the volume of each column in this area. They said probably the shadows will be worse than what this depicted. They said they tried to err on the side of being overly fair to the city, but a lot of people look at that and gasp and say, my God, what are we doing to our Hawaiian sense of place? Our number one, you know, the engine that drives our economy is tourism, and people come to Hawaii expecting something different than the image that that presents. Aside from the aesthetics, though, and the sort of sense of public space which we care or should care a lot about, there's another element too, and that is the 3rd Avenue L element where you build something over the street, now you change the neighborhood, now you change the whole dynamic of the way people conduct themselves under that rail. And rail stations tend to be magnets for crime. You look at rail stations around the country and you typically don't find particularly appealing places to be. Transit-oriented development has been described as a reason for building rail in Hawaii that developers are just going to be tripping over themselves to try to rush in and work out partnerships whereby they can get rights to build over the airspace and do all sorts of things to have lots and lots of dense living units right there at that rail station. Well, you'll notice none of those have been announced in the newspaper. There are none of them in the works to my knowledge. Elsewhere in order to get developers to do that kind of construction around rail stations, typically there have to be large subsidies paid to those developers. There are just a lot of reasons to be very suspicious of whether the promised transit-oriented development benefits would be there or not. But in the meantime, rail was used as the excuse for the Land-Jews Commission to change the land classification for a whole PE and Coa Ridge for single-family housing with big parks and the exact opposite of what would make sense to build the dense low-income affordable housing. BART, which is one of the rail systems elsewhere that has actually worked out well, BART on the whole has been successful in my opinion. But BART was expected to increase the density, the number of people living close to the stations. Two professors from Berkeley who actually were pro-rail did a study 20 years after BART had been completed and what they found was that it was the density that had increased more away from the stations as compared to... Nobody wanted to be near the station. So by comparison, the density had been reduced around where the stations were built. The point is that nobody knows exactly what will happen if rail is completed. But we've been told a lot of things, whether it was 10,000 jobs and we only get 1,000, we were told it was going to save energy and now from U.S. Department of Energy figures, we know that elevated rail in Hawaii, if the ridership projections are achieved, would be less energy efficient than what a single person in a single car is right now. Oh, wow. And you say, how could that be? It's because the train is scheduled to run 20 hours a day and it's going to be virtually empty except at rush hour. And so you've got all that weight going back and forth. And the point is that there are reasons to not just be skeptical of some things that have been said in the past, especially with hindsight, there's been some strategic misrepresentation. I think the community has a right to demand an investigation as to who knew what when because we didn't get here by accident. There were people who I think were saying things in order to get rail completed that they should. Let me read you a quote from Willie Brown, who was the head of California's assembly for many years, majority head, and then was mayor of San Francisco. Here's a quote after he was out of office in the Wall Street Journal a couple years ago. He said, in the world of civic projects, the first budget is really a down payment. If people knew the real cost from the start, nothing would ever be approved. That's a quote. You know in the private sector, if I was trying to talk you into investing in my business or lending money that I'd use in my business, if I told you what I needed to tell you in order to get you to give me that money, I'd go to jail, okay? Willie Brown is saying this is kind of the norm in terms of government officials. It's just a down payment what they say. That's why we have so little confidence in government these days, really. Well, and we can either grin and bear it, or we can say this has to stop, at least in this community. I can't bring world peace, but in this community we can at least put a light on things that need to be looked at. So we have a couple more photos and we have a couple more minutes. Let's look at the photos quickly. Well, just another rendering. This is on Nimitz looking toward Aloha Tower. You see it off in the right-hand corner there. That's as it looks right now, and now if you go to the next one, there you have with the rail station at that particular location. So let me ask you this, Randy, in our remaining time. What plan do you favor? What should we do? I agree with you about the investigation. I think we need to clear the air on that, find out what happens so it doesn't happen again. And it could happen again, you know? What do we need to do to deal with the situation that we find ourselves in right now? Plan A, B, or C? Which one do you favor and how to implement that? Right, right. I certainly don't have the background, the training, the experience to sit here and tell you what we ought to do. And even when I talk to somebody like Panos Prevaderos, who is the chair of the engineering department at the University of Hawaii, who is a traffic engineering, and I have the utmost respect for him, he would be the first to acknowledge that for the kind of alternatives analysis that needs to be done right now, no one person, no matter how impressive their credentials, has all that expertise. So what I'm in favor of isn't A, B, or C. I'm in favor of an objective, honest, alternative analysis that helps the decision-makers make informed decisions. And so far as the state legislature's concerned, I'd say, number one, even if you thought rail deserved to be funded, why would you use the most regressive tax in the state? Why wouldn't you say to the city, you think it's a good thing for this city, for this island, you use the property tax to pay it? Now, I'm not in favor of the city actually doing that, but my point is it would take an immediate 32% increase in property, immediate. People would feel that. From here to eternity. And the reason the city council has not done that is because they know the public wouldn't accept that. That's also the reason they haven't explained just what this is costing the family of five. And the reason why they and the legislature like to use the excise taxes because most people think the only excise tax they bear is what they see at the cash register. And you and I know that's not even half of what they bear. Most of it, they bear in the cost of a higher, you know, the paradise tax, the higher cost of living in Hawaii. The cost of paradise. It's all those familiar. Business taxes that get baked into the cost of goods and services. So what's your message? There's camera one. Talk to the people. Tell them what you want. Camera one with the red light on the top. Yeah. Folks, and I apologize. I get kind of worked up about this. My wife's right about this overdeveloped sense of justice. But this really smells this. This is a problem. How it got this far. I don't know, but that doesn't matter. What we as a community need to do is take a real hard look at where we are right now so that we don't continue to make mistakes that our kids and their kids are going to have to live with for a long, long time. So let's demand an honest, objective, alternative analysis before the city, before the state does anything in terms of more money, more money down this hole that already is consumed and off a lot of our money. Thank you, Randy Ross. I know you'll come back because I want to check back with you from time to time and find out what's happening. It's always good to see you, Jay. Thank you.