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Council, Please Ho'oponopono Honolulu Rail

Testimony of

Michael Asato

Transportation & Transit Planning Committee

City Council

City & County of Honolulu

Special Meeting on

HONOLULU HIGH-CAPACITY TRANSIT CORRIDOR PROJECT

DRAFT FINANCIAL PLAN FOR ENTRY INTO FINAL DESIGN

May 12, 2011

Whether you are for rail or against rail, one thing that we can all surely agree on is that it be done the “right”

way — the pono way.

In this regard what follows are precatory (prayerful) recommendations of Council fiduciary duties particularly

applicable to rail, where its due diligence should focus, corresponding troublesome findings, and remedies to

“make things right” — ho'oponopono [video].

I. Applicable Council Fiduciary Duties

1. Risk Mitigation

2. Legislative Oversight

3. Affirmative Duty of Candor

II. Due Diligence Focus

1. FTA Standard Cost Category (SCC) for Capital Projects Worksheet

2. City Ordinance 07-001 and Council Policy Resolution 00-29, CD1

3. National Environmental Policy Act (NEPA)

III. Corresponding Troublesome Findings on Rail

1. Kapakahi (Ass Backward) Phased Project Approach, and Worst-Case Scenario

2. Implicit Cross-Subsidy of General Fund to Capital Cost via Revenue-Fungible DBOM Core Systems Contract

3. Unethical Final EIS Presentation, and Senator Inouye’s False & Misleading Statement on Rail

IV. Ho'oponopono Remedies

1. Mitigate Risk for SCC 40.04 per FTA Contingency Criteria before FFGA Application

2. Ensure Compliance with Legislative Intents of City Ordinance 07-001, and Council Policy Resolution 00-29, CD1

3. Proclaim Apologies to Senator Inouye and General Public for Unethical Presentation of Final EIS

V. Summary: “Investment” Analysis of Honolulu Rail

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I. Applicable Council Fiduciary Duties

Transportation Committee Chair Breene Harimoto has characterized the Council as a “fiduciary.”1 For rail, three

applicable fiduciary duties are:

1. Risk Mitigation

2. Legislative Oversight

3. Affirmative Duty of Candor.

Risk mitigation ensures that Honolulu Rail is built within cost, on schedule, and as promised. Legislative

oversight ensures compliance with legislative intent. And affirmative duty of candor ensures that policies and

programs reflect the public interest.

II. Due Diligence Focus

In its due diligence the Council should focus on:

1. Federal Transit Authority (FTA) Standard Cost Category (SCC) for Capital Projects Worksheet

2. Revised City Ordinance 07-001 and Honolulu City Council Policy Resolution 00-29, CD1

3. National Environmental Policy Act (NEPA).

1. Federal Transit Authority (FTA) Standard Cost Category (SCC) for Capital Projects Worksheet

The FTA SCC Worksheet [link, spreadsheet] (e.g., page C-2 of City’s financial plan [link]) is a key document that is part

of the City’s application for a Full-Funding Grant Agreement (FFGA). Estimating cost contingencies is one of the ways

project managers manage and mitigate risk. At final design the FTA requires cost contingencies to be within plus or

minus 5 percent in probable accuracy (see below Table A-1: Recommended Contingency by Estimating Stage [link]).

For Honolulu Rail the FTA will likely focus on the cost contingency for SCC 40.04 Environmental Mitigation

(see screenshot of FTA spreadsheet below).

2a. Revised City Ordinance 07-001

Revised City Ordinance 07-001 [link] states that the capital cost for rail “shall be paid entirely from general

excise and use tax surcharge revenues, interest earned on the revenues, and any federal, state, or private

revenues.” Its legislative intent is to prohibit the use of General Funds (e.g., property taxes) to build rail.

2b. Honolulu City Council Policy Resolution 00-29, CD1

Honolulu City Council Policy Resolution 00-29, CD1 on “Establishing A Policy On Funding the Operating Cost of

the City Bus System” [link] states that “Bus fares shall be adjusted…so that the farebox recovery ratio does not

fall below 27 percent nor exceed 33 percent.”

3. National Environmental Policy Act (NEPA)

A key document of NEPA is the Environmental Impact Statement (EIS). As a disclosure document all significant

and material impacts must be presented in a good faith, forthright, and candid manner.

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III. Corresponding Troublesome Findings on Rail

Three corresponding problems with Honolulu Rail are:

1. Kapakahi (Ass Backward) Phased Project Approach and Worst-Case Scenario

2. Implicit Cross-Subsidy of General Fund to Capital Cost via Fungible-Revenue DBOM Core Systems Contract

3. Unethical Final EIS Presentation and Senator Inouye’s False & Misleading Statement on Rail

1a. Kapakahi (Ass Backward) Phased Project Approach

The City’s phased project approach starts from Kapolei, next Aloha Stadium, then Middle Street and finally to

Ala Moana Center. This is ass backwards (kapahaki): instead of starting from “easy” greenfield Kapolei to

“super hard” Ala Moana, prudent risk management dictates doing the “hard stuff” first in order to make

everything else “easy.” Project risk managers call this “hard stuff” a critical path item, and the critical path item

for rail is traversing Kakaako to get to Ala Moana Center.

Traversing Kakaako is “super hard” because there might be discoveries of iwi kupuna (Native Hawaiian “bones of

our ancestors”). Iwi kupuna was discovered when the Keeaumoku Walmart was built in 2003, forced Whole

Foods to abandon construction of its Kakaako store in 2009, and has delayed the construction of Kawaiahao

Church’s multipurpose center for two years now. According to a 2006 study by the City, there is a “high probability of

finding Native Hawaiian burials and other archaeological artifacts once construction starts in urban Honolulu” *link],

the Oahu Island Burial Council has warned that the City will encounter “high concentrations of unmarked Native

Hawaiian graves” on its planned route along Halekauwila Street [link], and the Native Hawaiian Legal Corporation

sued demanding that an archeological survey be immediately conducted. Unfortunately in March the lawsuit

was dismissed [link]. Undoubtedly the City’s failure to complete an archeological survey of Kakaako means that

the its FFGA application will be rejected because blind uncertainty of its SCC 40.04 Environmental Mitigation

cost contingency will fail the FTA criterion of probable accuracy being within plus or minus 5 percent.

FTA Management Guidelines (2003 Update): Appendix A - Cost Estimation Methodology Table A-1. Recommended Contingency by Estimating Stage [link]

Estimate Stage Probable Accuracy

*

Design Stage

Purpose Information

Available Contingency

Guideline

Order of Magnitude

(conceptual) 50% - 30% Preliminary

Evaluation of projects or alternatives

100-scale alignment, facility descriptions, sketches, study reports

20% or higher

Preliminary (budget)

15% - 30% Preliminary Design

Report (25%) Establish Control Budget

40-scale alignment, facility descriptions, sketches, study reports, cross sections, profiles, elevations, geotechnical data, staging plans, schedule, definition of temporary work

10% - 20%

Definitive 15% - 5% 75% to 100%

complete

Detailed Control Budget, Cost Control, and Reporting

Progress Plans and Specifications, working construction schedule

5% - 15%

Detailed (engineer's estimate)

±5% Plans, Specifications & Estimate (PS&E)

Check Estimate for Bids, Commit Funds

Complete Plans and Specifications for Bidding, Detailed Construction Schedule, Contract Terms and Conditions

0% - 10%

*Probable Accuracy as stated by the Association for the Advancement of Cost Engineering International.

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1b. Worst-Case Scenario – Stalled Construction at Kakaako

Now suppose the FTA overlooked SCC 40.04. Ominous about the City’s phased project approach is

susceptibility to what behavioral economics call the “sunk cost fallacy” and B-school professors refer to as the

“escalation of commitment” [link] in which CEOs are ultimately fired to change the direction of a company:

i.e., having invested an enormous amount of time, money and energy in a project it becomes almost impossible

to pull-the-plug thereby throwing good money after bad.

For rail imagine flawlessly construction from Kapolei to Downtown ahead of schedule and under budget only to

come to a screeching halt and stalled in Kakaako from discoveries of iwi kupuna. With archeological excavations

being painstakingly slow, massive standing armies of highly paid (Davis-Bacon Act wage rates) construction

workers will be forced to take paid “vacations.” (After all it wasn’t the contractors’ fault for delays so fairness

demands they be fully paid “as contracted” for their construction workers who relied on the City’s contract(s) to

pay their own bills.) Literally like trench warfare, construction of the rail guideway crawls towards Ala Moana

Center causing schedule slippages and massive cost overruns. With the Rail’s construction budget blown, the

fed’s $1.55 billion grant completely exhausted, and Ala Moana Center in plain sight the 0.5 percent GET

surcharge sunset date gets extended over and over again as the years pass.

Meanwhile since Phase III rail only goes to Middle Street, transit-oriented developments (TODs) remain ghost

towns of unsold homes and empty stores with their developers defaulting (and their equity investments wiped

out) because no one wants to take-out their construction loans. Of course bank regulators would never allow a

banker to go into a deal with foreclosure and restructuring as an objective, but its cover story will be that the

FTA did its own due diligence and blessed everything. If my analysis is correct, two sure winners will be

construction workers who get secure, long-term work and forced paid “vacations” at Davis-Bacon Act wage

rates, and bankers (of course not First Hawaiian Bank) who know that their construction loans will be repaid in

full (with exorbitant interest and/or equity stakes received in workout) when rail is completed. Brilliant!

Finally when Ala Moana Center is reached and rail declared fully operational, public trust and confidence in City

government is shattered by this debacle. Viewing rail as an “investment,” this worst-case scenario is the risk

that Oahu residents — and the current City Council whose many freshmen members may seek higher office in

2018 are held accountable when rail blows up with embarrassing video clips from Olelo on them casting their

votes in 2011 — are being asked to take.

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2. Implicit Cross-Subsidy of General Fund to Capital Costs via Revenue-Fungible DBOM Core Systems Contract

The stalled Kakaako scenario is reflected in the table below from Table A-2, Operating Plan Cash Flows of Honolulu

Rail’s Financial Plan (April 2011) [link, Acrobat p. 51] where the final Ala Moana station has yet to be operational

and hence Fare Revenues (Rail) remain capped at $13 million for FY2020 through FY2023. This assumes that the

Core Systems contractor has performed flawlessly and hence should be fully paid as contracted because delays

were not its fault. The net change in Fare Revenues (Rail) — or equivalently, Operating Subsidy (Rail) —

between the City’s baseline and the stalled scenario is $81 million from FY2020 to FY20023. Note that $548 million

from FY2016 through FY2023 of the General Fund will be encumbered under Fixed Guideway O&M Costs for the

combined Intermediate Operating Periods #1 & #2, and Full Operating Period contracts regardless of the baseline

or stalled scenario. (There is also an Optional Operating Period contract from March 2024 to March 2029.)

Rail Financial Plan Table A-2 (Stalled Kakaako Scenario): Operating Plan Cash Flows [link, Acrobat p. 51]

City Fiscal Year FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023

Fare Revenues (Rail, Baseline) 2 4 5 13 31 33 33 37

Fare Revenues (Rail, Stalled) 2 4 5 13 13 13 13 13

$24M (Intermediate Operating Periods #1 & #2) $52M (Kapolei to Middle Street operational)

$76M (Kapolei to Aloha Stadium to Middle Street operational)

Fixed Guideway O&M Cost 31 50 63 78 92 93 95 98

$222M (Intermediate Operating Periods #1 & #2) $326M (Full Operating Period Contract)

$548M (8 years)

Operating Subsidy (Rail) 29 46 58 65 79 80 82 85

$472M (Kapolei to Aloha Stadium to Middle Street operational)

Farebox Recovery Ratio (Rail) 6.6% (Kapolei to

Aloha Stadium to

Middle Street

operational)

7.2% 8.0% 17.1% 14.1% 14.0% 13.7% 13.3%

9.7% (Intermediate Operating Periods #1 & 2) 13.8% (Full Operating Period Contract)

11.8% (8 years)

More interestingly, from the Core System contractor’s perspective revenues are fungible in a Design-Build-

Operate-Maintain (DBOM) contract: It doesn’t matter if revenues are derived from the design-build part or the

operations & maintenance (O&M) part of the contract. Notice the paltry farebox recovery between FY2016

through FY2019: spending $222 million for Fare Revenues (Rail, Stalled) of $24 million. This means that during

Intermediate Operating Period #1 (between Kapolei and Aloha Stadium) and Intermediate Operating Period #2

(between Kapolei and Middle Street) the trains are running virtually empty. Thus although the City’s Financial

Plan technically complies with Revised City Ordinance 07-001 in that the General Fund cannot be used to buy

railcars, etc. the fungibility of the DBOM contract means that up to $548 million of General Fund expenditures

for O&M cost are implicitly cross-subsidizing rail capital costs — which is a violation of the legislative intent

(at least in spirit)!

The public policy question is whether it is worth spending $472 million of Operating Subsidy (Rail) from the

General Fund to subsidize $76 million Fare Revenues (Rail) with an average Farebox Recovery Ratio (Rail) of

11.8% (FY2016-FY2023). Although Rail and TheBus are technically not the same, they are analyzed combined in

Rail Financial Plan Table A-1 [link, Acrobat p. 50] on a “system-wide” basis — hence for the purposes of

legislative intent their farebox recoveries can be analyzed on an apples-to-apples comparable basis. It is clear

that the Farebox Recovery Ratio (Rail) of 9.7% for Intermediate Operating Periods #1 & #2 — and 13.8% for

Full Operating Period — are far below the 27% floor in Honolulu City Council Policy Resolution 00-29, CD1 on

“Establishing A Policy On Funding the Operating Cost of the City Bus System” — which is another violation of

legislation intent (at least in spirit)!

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3. Unethical Final EIS Presentation and Senator Inouye’s False & Misleading Statement on Rail

The presentation of the Honolulu Rail Final EIS [link] is unethical because a highly significant and material

impact assessment was buried deep in the fine print of two tables (and disclosed nowhere else) — and this

assessment is indisputably essential for fully informed public debate and Council deliberation. Evidence is a

screenshot of page 3-21 presenting Table 3-9: A.M. Peak-hour Screenline Impacts Analysis; and screenshot of

page 3-23 presenting Table 3-10: P.M. Peak-hour Screenline Impacts Analysis. Because the public policy purpose

under NEPA of an EIS is good faith disclosure, this is bad faith.

The following are summaries of the fine print of Table 3-9 and Table 3-10 that grade level-of-service (LOS) and

assess Honolulu Rail will have “No” material or significant project and cumulative impact on reducing

Honolulu’s notorious reputation of traffic gridlock as the nation’s second worst freeway [link].

Table 3-9: A.M. Peak-hour Screenline Impacts Analysis [link, pp. 3-21 to 3-22]

Morning Rush Hour

(Koko Head bound)

2005 Actual LOS w/o Rail

2030 LOS with Rail

Project Impact?

Cumulative

Impact?

H-1 Freeway at Waikele E (poor) F (failure) No No

H-1 near Aiea (Kalauao) D (fair) D (fair) No No

Moanalua Freeway E (poor) E (poor) No No

H-1 at Kinau off-ramp F (failure) F (failure) No No

H-1 at Ward Avenue F (failure) D (poor) No No

Table 3-10: P.M. Peak-hour Screenline Impacts Analysis [link, pp. 3-23 to 3-24]

Afternoon Rush Hour

(Ewa bound)

2005 Actual w/o Rail

2030 with Rail

Project Impact?

Cumulative

Impact?

H-1 at Ward Avenue F (failure) F (failure) No No

H-1 at Vineyard off-ramp E (poor) F (failure) No No

Moanalua Freeway D (fair) D (fair) No No

H-1 near Aiea (Kalauao) D (fair) F (failure) No No

H-1 Freeway at Waikele E (poor) F (failure) No No

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Of course the City could argue that it never did represent that rail would reduce traffic gridlock except that it

failed to correct U.S. Senator Dan Inouye’s misinformed false and misleading public statement when Governor

Abercrombie signed the Final EIS in December 2010 of “the importance of a rail system for Honolulu to reduce

traffic gridlock” (see screenshots of KITV News, December 16, 2010 [video, jump 3:00]).

Because Senator Inouye is beloved, trusted, and hence highly influential in Hawaii, by not correcting his false

and misleading statement, the City has put in peril his reputation, good name, and most importantly, legacy

(particularly should the construction of Honolulu Rail result in a debacle). The City’s failure to correct Senator

Inouye’s false and misleading statement is unethical: that is not right, not pono.

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IV. Ho'oponopono Remedies

Committee Member Stanley Chang has waxed eloquently on the importance of public trust and confidence

regarding Honolulu Rail.2 Restoring them can be accomplished through the exercise of the Council’s

policymaking power of the purse in its approval of HART’s operating & capital budgets, and power of

proclamation, to ho'oponopono — to do things right, and make things right.

1. Mitigate Risk for SCC 40.04 per FTA Contingency Criteria before FFGA Application

Clearly it makes no sense to submit an application for FFGA unless SCC 40.04 Environmental Mitigation satisfies

the FTA’s criterion of contingency cost having a plus or minus 5 percent precision accuracy. To meet this

criterion an archeological inventory survey (AIS) has be completed for the Kakaako corridor, and to restore and

maintain the public trust and confidence (especially the Native Hawaiian community) an independent third party

such as the Oahu Island Burial Council should verify and validate the findings of the survey. On the one hand,

the Kakaako AIS may take years (we now don’t know because it hasn’t been completed). On the other, per

Councilmember Ikaika Anderson’s insightful line of questioning at the March 17 Budget Committee meeting3 on

“anticipating the Full Funding Grant Agreement,” the City’s Rapid Transit Division (RTD) Chief Toru Hamayasu

replied: “it could occur as early as in the end of this calendar year, 2011” (PMOC says, September 2012). The

point here is that without a completed Kakaako AIS the RTD chief has no basis for making that claim because the

precision accuracy of SCC 40.04 is unknown — and hence the City’s application for FFGA will surely be rejected.

Clearly the RTD Chief has not factored the Kakaako AIS in his FFGA schedule. To quickly remedy this situation

the Council should earmark General Funds (later reimbursed by the Transit Fund) to streamline and accelerate

the Kakaako AIS. Put another way, instead of digging up Waipahu to relocate utility lines (which would be a

waste of taxpayer money should the Kakaako AIS take years), the City should first be digging up Kakaako to find

the “ground truth” on iwi kupuna.

Because the potential discovery of iwi kupuna in Kakaako is “the” critical path item, out of an “abundance of

caution” prudent risk mitigation suggests that construction for rail should begin in Phase IV. It is only when

Phase IV sitework has been completed that a notice-to-proceed be given for construction under the Phase I

through III and Vehicle Storage & Maintenance contracts. There should be zero risk of work stoppages caused

by discoveries of iwi kupuna in Kakaako.

2. Ensure Compliance with Legislative Intents of Ordinance 07-001, and Council Policy Resolution 00-29, CD1

The Core Systems contract should be re-competed with the new requirement of no O&M until rail is fully

operational from the East Kapolei station to the Ala Moana Center station (note in red the switching tracks to

turn a train around). Fortuitously losing bidder protests have made this easy and could be an amicable way to

settle their protest lawsuits.

East Kapolei Station [link, p. 2-35] Ala Moana Center Station [link, p. 2-42]

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Phase II and Phase III contactors should receive engineering change orders to delete switching tracks (notice

none shown in FEIS drawings below to turn a train around at the Aloha Stadium station and Middle Street station).

Aloha Stadium Station [link, p. 2-38] Middle Street Station [link, p. 2-39]

If Phase IV is off the critical path and the construction is on schedule then these “temporary” switching tracks

are not needed because they will be used for respectively 2 and 4 years (see Figure 2-42: Project Schedule, FEIS

[link, p. 2-48]) – thereby keeping the guideway design and construction [link] super simple as a straightaway.

Here “system testing and operation” (FEIS [link], p. 2-47) can be conducted between the East Kapolei station

and the vehicle storage & maintenance facility near either Leeward Community College [link, p. 2-44] or Ho'opili

[link, p. 2-45]. (Obviously these rail yard facilities will have switching tracks to turn a train around.) Fortuitously

because these contracts are in the “paper” design stage, this engineering change order is trivial.

3. Proclaim Apologies to Senator Inouye and General Public for Unethical Presentation of Final EIS

The Council should apologize to Senator Inouye for the City having caused him to make his misinformed false

and misleading public statement: “the importance of a rail system for Honolulu to reduce traffic gridlock.”

To carry out its affirmative fiduciary of candor — and ensure Honolulu Rail reflects the public interest — through

proclamation the Council should make the full-throated, candid, and intellectually honest disclosure in crystal

clear, non-ambiguous statements that per FEIS Tables 3-9 and 3-10, Honolulu Rail will have no impact on

reducing Honolulu’s “traffic gridlock” for fully informed public debate on its future.

Councilmembers, what is happening on Honolulu Rail is not right, not pono. Please ho'oponopono.

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V. Summary: “Investment” Analysis of Honolulu Rail Vice Chair Martin has characterized Honolulu Rail as an “investment.” 4 An investment can be analyzed in terms

of its risk and return: i.e., is the expected return-on-investment worth the risk? As shown above the “risk” of

Honolulu Rail is the worst-case scenario of stalled construction in Kakaako (with at least a $5.5 billion price tag).

For the “return” I suggest reflecting on the following passage by former British Member of Parliament

Bryan Magee who wrote in “What Use is Popper to a Politician?” in Popper's Open Society After Fifty Years:

The Continuing Relevance of Karl Popper (Ian Jarvie (ed.), Routledge, 1999):

In politics solutions, real or attempted, are normally called policies. Every reputable political or social policy is a proposed solution to a problem; and we always need to be clear about the problem before we can propose a solution. We must always be able to ask of a policy: ‘To what problem is this the solution?’ If there is no problem to which a given policy is a solution then the policy is superfluous, and therefore harmful, if only because it consumes resources to no purpose. … It is essential to start from problems, and to arrive at the formulation of each policy only as a solution to a problem.

As an aside, if you listen carefully to President Obama when he speaks on our nation’s great challenges, he often

frames his remarks in terms of problem solving [e.g., video]. Thus the expected return-on-investment can be

identified by asking, To what “problem” is Honolulu Rail the solution? Note that what you or I regard as a

“problem” (or priority) is fundamentally a values judgment.

Framing policymaking as problem solving can be operationalized by the format of the U.S. Army staff study

(FM 101-5, Appendix D [link]). Following its format, in Vice Chair Martin’s words, some “tough questions to be

assured that this investment is the best value for our taxes, especially in these critical times” are:

To what “problem” is Honolulu Rail the solution? And why is it a “real” problem?

» Traffic gridlock? Job creation? Development?

What are the “other” ways to solve this problem?

» This is the analysis of alternatives complaint of the Cayetano/Slom/Slater lawsuit [link].

And in all intellectual honesty, why is Honolulu Rail the “best” way to solve the problem?

A selection criteria for “best” (and an alternative to cost-benefit analysis) is:

External Validity: How well a proposed solution solves “the problem.”

» Rail does not solve “the problem” of reducing traffic gridlock.

Interval Validity: No internal inconsistencies, unintended consequences, side effects.

» Rail does not comply with Ordinance 07-001, and Council Policy Resolution 00-29, CD1.

Implementable Validity: Do-ability, SMART (specific, measurable, attainable, realistic and timely) goals.

» Rail does not have the full trust and confidence of Oahu taxpayers.

For near-term job creation, Governor Abercrombie $2.9 billion “New Day Projects” over the next two years [link]

will go a long way to solve that problem. For development, how about taking advantage of seawater air conditioning

(SWAC) technology [link] to build a very high density skyscraper second city in Kalaeloa (i.e., decommissioned Barbers

Point Naval Air Station with its airport runway realigned and curfews like Santa Monica Municipal Airport [link] to

compact its noise contour) fronted by a lush “Ala Moana”-sized beachpark landscape-irrigated with recycled water

from Honouliuli’s membrane bioreactor *link] installed when it is upgraded for secondary wastewater treatment —

literally per the Hawaii 2050 Sustainability Plan, “building up, rather than out” [link, Acrobat p. 50] to

“keep country, country?” Moreover this SWAC seawater could be used to create a land-based aquaculture

industry to raise say mahimahi, onaga, and opakapaka—and for export, abalone like at NELHA [link]. How’s that

for development and long-term job creation? Again, To what “problem” is Honolulu Rail the solution?

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1 Chair Breene Harimoto, Transportation Committee Meeting, March 30, 2011: “This is the largest public works project in the history of this State. The public is demanding some oversight, demanding answers — and it is our fiduciary responsibility to ask questions and to be accountable to our constituents.”

2 Councilmember Stanley Chang, Transportation Committee Meeting, March 30, 2011: “In summary Chair Harimoto I wanted to thank you for your patience in allowing to ask all these questions. I think it's imperative both in our duty as councilmembers to our constituents in our respective districts that we demonstrate the level of due diligence that I believe we were all elected to perform on projects on such importance to the future of this City as this one. So I very much thank the Administration and everyone here today for answering all these questions as patiently as you have. And I might also add that in addition to our respective obligations to our respective constituents that I think it is extremely important for the public trust and confidence in the long-term success of rapid transit in Honolulu that this spirit of openness and transparency be all pervasive, and that in every context, in every situation that the Administration will be as open and candid and forthcoming and proactively candid as possible whether it is good news, whether it is bad news, whether there is public concern as there is in this case, when there is no public concern as there are undoubtedly in other cases, and that only by that spirit of true, open, proactive transparency will the public have the full level of confidence and trust in the Administration, in the city government as to justify undertaking the largest public works project that the State has ever undertaken and more importantly not just the largest in terms of dollar value but the single, I think biggest project that either the State or City has undertaken to change our way of life, to fundamentally alter the way of life of the people of Honolulu as this project. I'm 28 years old. I've not seen in my lifetime another change either the Federal or State or City governments have undertaken here to fundamentally change my way of life as this rail project possibly back to the advent of the popularization of jet travel. Because this is a project of such importance as you are extremely well aware we are very grateful for the opportunity to perform our due diligence in the most open and transparent and candid way possible to further the public trust and confidence in us, in you, in the city government of Honolulu. So with that thank you very much Mr. Chair for your patience and thank you very much again to the Administration for answering this extremely thorough and lengthy line of questioning.”

3 Councilmember Ikaika Anderson, Budget Committee Meeting, March 17, 2011 [link, video, jump 2:22:27]:

Anderson: Now when are also we anticipating the Full Funding Grant Agreement at this point in time?

Hamayasu: Either later this calendar year or early next year in 2012.

Anderson: And you folks are going to be asking for a bond float at some point this year? The reason I am asking is just based on the PowerPoint presentation.

Hamayasu: Not bond floating in fiscal 2012, but obligation for the encumbrance of that bond identified money in 2012. But floating the bond or issuing the bond we anticipate in fiscal 2013.

Anderson: But you do plan to ask Council to authorize that in fiscal year 2012.

Hamayasu: I think that is required.

Anderson: By whom?

Hamayasu: In Charter.

Anderson: Now I am looking at the PMOC Monthly Report, the final that was dated February 2011. And on page 18 of that document it states that the FTA award Full Funding Grant Agreement projection is for September 2012. So if in fact without looking for the FFGA until that time, why would we be asking for the bond float in fiscal year 2012? In short, September 6, 2012 is not until fiscal year 2013, so why are we even contemplating asking for a bond float or authorization of one in fiscal year 2012?

Hamayasu: I'm sorry but I am having a difficulty trying to connect those two events to be relevant.

Anderson: You don't see any relevance in the FFGA with the bond float?

Hamayasu: I'm sorry I don't see that.

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Anderson: So you think it would be fiscally responsible for the Council to authorize floatation of bonds without having a commitment from the FTA to the full FFGA?

Hamayasu: If we are going to do this project, yes.

Anderson: So you think it is going to proceed then without having that FFGA first?

Hamayasu: That's how the process works, yes.

Anderson: For some reason if Council decides to wait until the FFGA, then what happens?

Hamayasu: I think there is going to be a delay in the project, and additional money because of that delay.

Anderson: Okay, but you have said that the reason you folks are ... what I heard and please correct me if I am wrong but I heard that is that you are anticipating FFGA possibly by the end of this calendar year?

Hamayasu: End of this calendar year, yes it could occur as early as in the end of this calendar year, 2011 -- and then early 2012 or I guess the PMOC has a different opinion and they are saying September. We are saying early 2012.

Anderson. Okay, and if that were the case I could possibly understand why you might be asking for the authorization of the bond but if in fact we don't get the FFGA until September 2012 as this February 2011 Final PMOC Monthly Report states, I just don't see the urgency. And in fact I have been questioned on that by my own constituents?

Hamayasu: Urgency is because any delay would be adding the cost to the project, and this project cost has been developed with a certain schedule as disclosed in the EIS as well as early as the DEIS in 2007, so we are just following that schedule.

4 Vice Chair Ernest Martin, Transportation Committee Meeting, March 30, 2011: “All the members of this Council are accountable to a significantly greater population, and all of our line of questioning that is basically the rationale. Being that this is the largest public works project in the history of our State, there are concerns irrespective of whether you are supportive of rail or not, and I think the people we represent want us to ask these tough questions to be assured that this investment is the best value for our taxes, especially in these critical times. I just wanted to make that statement.”