Hart Recovery Plan - Sept. 15, 2017

HonoluluRailTransitProject Page13of213
RecoveryPlanSeptember15,2017
1 ExecutiveSummary
1.1 Introduction
OnDecember19,2012,theFederalTransitAdministration(FTA)andtheCityandCountyof
Honolulu(City)formalizedapartnershipbysigningaFullFundingGrantAgreement(FFGA)
fortheHonoluluRailTransitProject(HRTPorProject).TheHonoluluAuthorityforRapid
Transportation(HART)isthesemiautonomouspublictransitauthorityresponsibleforthe
planning,construction,andexpansionofthefixedguidewaytransitsystemfortheProject.
TheHRTPisa20.1milefixedguidewayrailsystemwith21stationsextendingfromEast
KapoleitoAlaMoanaCenter.By2030,nearly70%ofOahu'spopulationandmorethan80%
oftheisland'sjobswillbelocatedalongthe20.1milerailcorridor,withstationsatkey
commuterandvisitordestinationssuchastheHonoluluInternationalAirport,JointBase
PearlHarborHickam,anddowntownHonolulu.TheinitialStateofHawaiiGeneralExcise
andUseTax(GET)surchargewasintendedtoprovidea70%localshare(30%federalshare),
whichisoneofthehighestlocalshareovermatchesintheFTANewStartsProgram.
TheProjecthasfacednumerouschallengessinceitsinceptionthathaveresultedincost
increasesandscheduledelays.Projectplanningandcostestimatesweredevelopedinthe
midstofarecessionandwerehamperedbyanumberofeventsthatwerebeyondthe
anticipationoftheoriginalparties.Atthesametime,therewerewellintendeddecisionsto
awardvariousProjectconstructioncontractstostimulatelocaljobcreationpriorto
completingallthirdpartyagreements,contractorinterfacerequirementsand,insome
cases,applicabledesigns.Consequently,theseearlycontractawardshadsubsequentcost
andscheduleimpactsthathavecontributedtotheneedforthisRecoveryPlan.
Inaddition,delaysassociatedwithNoticetoProceed(NTP),theArchaeologicalInventory
Study(AIS),andTraditionalCulturalProperties(TCPs)whichsuspendedconstruction
activitiesontheWestOahu/FarringtonHighwayGuideway(WOFH),KamehamehaHighway
Guideway(KHG),andMaintenanceandStorageFacility(MSF)contractshadalargeimpact
onprojectcoststotaling$172million,includingescalation.Moreover,thelawsuitdelays
pushedconstructionactivitiesintotherecoveryyearsfollowingtherecession,whichhada
cascadingimpactonscheduleand,inturn,hadevenfurthercostimpactsontheProject.
Finally,anequallyharmfulandevenlongertermcostimpact,alsobeyondthecontrolofthe
Projectsponsor,isthefactthatHonolulubecamethemostexpensivecityforconstruction
intheUnitedStatesfortheyears2012through2016,accordingtotheRiderLevettBucknall
NationalConstructionCostIndex.Whiletheexecutionofsomeearlycontractsinhindsight
wasunfortunateandhadsubstantivecostimpacts,therewerealsomanycostimpactsthat
couldnothavebeenanticipated.
Page14of213 HonoluluRailTransitProject
Despitethesechallenges,HART,theCity,andtheMayor'sOfficearecommittedto
constructanddelivertheProjectasdescribedintheFFGA.WiththisupdatetotheRecovery
PlanwhichnowincludesaFinancialPlanthatispredicatedonadditionallocalrevenues
generatedbyAct1RelatingtoGovernmentoftheTwentyNinthLegislature,2017,First
SpecialSession(Act1),whichwasenactedintolawwiththesignatureofGovernorDavidIge
onSeptember5,2017HARTisabletoconfirmthatithastheresourcestocompletethe
HRTPasdescribedintheFFGA20.1mileswith21stations.SubsequenttotheStateaction,
theCityCounciladoptedOrdinance1748insupportofthefundinglanguageinthebill,and
theMayorsignedthesameonSeptember7,2017.
Inaddition,thisRecoveryPlandemonstratesthatHARThasdiligentlydevelopedandputin
placemanagementstructures,controls,andproceduresthatareasimportanttothe
recoveryofthisProjectasaretheneededadditionalfunds.
ThisupdatedRecoveryPlanfurtherdetailstheorganization'scorecompetenciesandthe
developmentandimplementationofcriticalprojectmanagement,riskmanagement,and
costandschedulecontrolsthatareessentialtotherecoveryofthisProject.HARTisalso
proactivelyevaluatingadditionalopportunitiestoreduceprojectcostandrevisingfuture
contractlanguageandrequirementsbasedonknowledgegainedfromhavingprepared,
awarded,andmanagedprioralternativedeliverytransitcontracts.Therecentcancellation
ofthedesigncontractforthefinalCityCentersegmentoftheProjectduetoaconflictof
interestcreatedbythemergerofthedesignfirmandaconstructionfirmontheMiddle
StreetsegmentoftheProjectfacilitatestheopportunitytostructurethatcontract
procurementtobecosteffectiveandprovideschedulecertainty,andHARTwillconsiderall
optionsincludingaDesignBuildFinancesolicitationfortheCityCenterguidewayand
stationsthatincludesapossiblePublicPrivatePartnership(P3)element.SeekingP3
financingasapartofaDesignBuildFinancesolicitationcouldpotentiallyreducethepublic
fundingelementsoftheCityCentercontractaswellaspotentiallytransferscheduleand
costrisk.RegardlessofthebidprocessusedfortheCityCentersegment,costandschedule
controlswillbeincreasinglyimportantastheProjectmovesintoHonolulu'sdenseurban
core.ThedelayintheprocurementoftheCityCenterSectionGuidewayandStationGroup
(CCGS)contracthasenabledHARTtoadvancetheutilitiesdesignasDesignBidBuild
documentsminimizingtherisksassociatedwithutilitiesrelocationsandapprovals.
1.2 ManagementCapacityandCapabilities
HARTisconfidentthatitcansuccessfullydelivertheProjectwithitsexperiencedkey
personnelandcorecompetencies.AsdetailedinSection3.2.3ofthisupdatedRecovery
Plan,HARTnowhasinplaceacoregroupofindividualswhohavethequalificationsand
experiencetocompleteamajortransportationprojectofthisscopeandcomplexity.
AcontinuingchallengefortheProjecthasbeenhiringandmaintainingexperiencedrail
transitandconstructionmanagers.GiventhefactthatthisisHonolulu'sfirstrailtransit
constructionproject,itsremotelocation2,400milesfromtheU.S.mainland,andthefact
thatitisoneofthemostexpensivecitiesintheUnitedStatesinwhichtolive,hiringand
retainingexperiencedpersonnelhasbeenachallenge.Section3,"ManagementCapacity
andCapabilities,"outlinesthestepsHARThasbeentakingtoimmediatelyaddressopen
seniormanagementpositions,anditdescribeslongertermeffortstomentorHawaiibased
personneltowardtheskillsandexperienceneededtoassumeleadershiproles.
OnSeptember5,2017,AndrewS.RobbinsbecameHART'snewExecutiveDirectorandCEO.
Mr.Robbinsbringsmorethan37yearsofrailtransitexperiencetotheProjectalongwitha
particularexpertisewithdriverlesspublictransitsystemsthatoperateelsewhereinthe
world.TheseskillsandexperiencewillbemosthelpfulasHARTcommissionsthefirsthigh
techdriverlesstraintobeusedonacitywidetransitsystemintheUnitedStates.
Mr.RobbinswillbuilduponthemomentumestablishedbyHARTInterimExecutiveDirector
andCEOKrishniahMurthywithrespecttostreamlinedprojectdeliveryandefficientcost
andcontainmentcontrols.
HARThasmadegreatstridesindevelopingarobustProjectControlscapabilitythatisan
integralpartoftheProjectdeliveryteam,whichhadbeennotedasaspecificareaof
concernbytheFTAandtherecentAmericanPublicTransportationAssociation(APTA)Peer
Review.ProjectControlshasworkedtorebaselinetheProjectscheduleandbudgetandto
developatrendanalysisfortheearlydetectionofcostoverruns,scheduleimpacts,and
projectrisk.DevelopmentandimplementationofrobusttoolssuchastheMasterProject
IntegratedSchedule(MPIS)hasresultedinincreasedcommunicationandcoordinationwith
ProjectstakeholdersandstrongermanagementoftheProjectatalllevels.
In2016,HARTincreaseditsfocusonriskbyimplementingaformalriskmodelingprogram
thatusesarigorousbottomupanalysisandcrossdepartmentalinputtoestablish
confidenceinProjectcostandschedule.TheRiskManagementCommittee,established
earlierthisyear,meetsmonthlytoreviewthehealthoftheProjectasitrelatesto
contingencydrawdowncurvesandriskexposure.Thesediscussionsenableexecutive
managerstomorecloselymonitorProjectriskitemsandallowriskownerstoapply
mitigationstopreventcostandscheduleimpacts.
TheHARTOperationsandMaintenance(O&M)Divisionisdedicatedtocontainingcostsand
maintainingscheduledsystemopeningsbyensuringaseamlesstransitionfromcapital
constructionandcommissioningtopassengerservice.TheHARTO&MDivisionmeets
regularlywiththeCityDepartmentofTransportationServices(DTS)leadershiptoactively
workonaroadmaptorevenueservice.DuringthecurrentphaseoftheProject,theHART
O&MDivisionremainsfocusedonorganizationaldevelopmentandplanning,ensuring
systemoperabilityandmaintainability,andevaluatingandcommunicatingoperationsand
maintenancecostimplications.
1.3 CostReductionsandContainment
HARThasimplementedcostcontainmentandcostreductionmeasuresincludingexploring
projectdeliveryefficienciesbyrevisingcontractrequirementsandpackagingstrategies,
brainstormingmitigationstoknownrisks,implementingvalueengineeringprinciplesto
reducecostwithoutcompromisingfunctionalrequirements,evaluatingcostavoidance
throughanactivelessonslearnedprogram,evaluatingsoftcosts(suchasconsultants),and
proactivelyevaluatingthecostsandbenefitsofaninterimopening.HARThasalsoadopted
recommendationsfromtherecentAPTAPeerReviewandplanstoholdafollowon
technicalreviewbytheendof2017focusedontechnicalcompetencyofitscoregroup,
interactionswithutilitycompanies,andcontractualnegotiationsandadministration.
HARTandtheHawaiianElectricCompany,Inc.(HECO)collaboratedtoaddressasignificant
costriskassociatedwiththeguidewaystructureimpingingonsafetyclearanceareasfor
HECO'selectrictransmissionanddistributionlines.Althoughnegotiationsarestillunderway
tofullymanagethisrisk,HARTandHECOidentifiedalternativeservicemaintenancevehicles
toaddresstheworkingclearanceneededbetweenHART'srailguidewayandHECOutilities
andassociatedsteelandwoodenpoles.Additionally,HECOgrantedHARTvariancestotheir
originalclearancerequirementsincertainareas,allowingtheProjecttoavoidcostly
overheadandundergroundutilityrelocations.TheAirportSectionGuidewayandStation
GroupContract(AGS)willuseacombinationofalternateservicevehicles,increasedNavy
easements,andredesigned(reframed)polearmstoavoidundergroundingtheninepole
138kilovolt(kV)systemfrontingJointBasePearlHarborHickam.Addressingtheseissues
thusfarhasresultedinProjectsavingsofapproximately$138millioninpotentialProject
cost.TheCCGSdesignteamisreviewingplanswithHECOtoundergroundallofHECO's
utilitylinesalongDillinghamBoulevard.Theseefforts,alongwiththerevisedRisk
ManagementandProjectControlsstructuresandactions,areintendedtocontaincostand
schedulegrowthassociatedwiththisspecificrisk.
1.4 CompletionoftheFFGAScope
Usingtheprojectmanagementtechniques,riskanalysis,costcontainment,andproject
controlsdescribedinthisRecoveryPlan,HARThasdevelopedanupdatedProjectCostof
$8.165billionandanupdatedRevenueServiceDateofDecember2025.HARTbelievesthat
thiscostestimateandschedulearerealisticandachievable.HARTiscommittedto
completingtheoriginalFFGAscopeinaccordancewithinthiscostandschedule.HART
acknowledgesthatthefederalfundingcommitmentfortheProjectiscappedunderthe
FFGAandthattheadditionalfundsneededtocompletetheFFGAscopemustbeprovided
fromnonfederalsources.
Asdescribedearlier,actionsbytheStateLegislatureandtheGovernor,andforthcoming
localfundingactionsbytheHonoluluCityCouncilandtheMayor,havemadethe
completionoftheProjecttoAlaMoanaCentertheoriginalscopeoftheFFGAachievable.
1.5 Conclusion
TheProjectis38%complete,basedontheweightedvalueofprogressoftheindividual
constructionanddesigncontracts.TheProjectisscheduledtoopenforpassengerservice
onDecember31,2025,andhasacurrentconstructioncostestimatetotalof$8.165billion
inclusiveofcontingency,excludingfinancecosts.
InadditiontoongoingresponsibilitiesandtheactionsstatedintheRecoveryPlan,HART's
majorupcomingmilestonesincludeprocuringtheCCGSDesignBuildcontractandHECO
coordination.TheCCGSDesignBuildcontractisthelastmajorcontracttobeprocuredand
thecriticalpathfortheoverallProject.UtilityrelocationisasignificantpartoftheCCGS
DesignBuildcontractinHonolulu'surbancore,andHARTisproactivelyperformingpre
constructionSubsurfaceUtilityEngineeringandgeotechnicalwork.Thesefinalcontractswill
benefitfromlessonslearnedandvalueengineering(describedinSection4oftheRecovery
Plan)aswellasupdatestoProjectControls,particularlytherobustMPISandRisk
Assessment.
ThisupdatedRecoveryPlanlaysoutthelocalfundingnowavailabletomeetthecurrent
costestimateandcompletetheProject,notincludingfinancingcosts.Italsodetailsa
carefullydevelopedandinternallytestedanalysisoftheProject'smanagementcapacityand
capability,whichhasresultedinamanagementstructureorientedtowardswift
implementationofprojectcontrolsdesignedtomanageidentifiedrisks.
2 ProjectBackground
2.1 PurposeoftheRecoveryPlan
TheApril28,2017,RecoveryPlansubmittedtotheFTAincludedtwooptionsforcompletion
oftheProject.Theinclusionofthesecondoption,orPlanB,wasduetotheuncertainties
regardingadedicatedsourceoffundingatthattime.
OnTuesday,September5,2017,theGovernoroftheStateofHawaii,DavidY.Ige,signed
intolawAct1,providingadditionalfundingtotheCityandHARTtocompletea20.1mile
and21stationelevatedrailtransitsystemextendingfromEastKapoleiinthewesttothe
AlaMoanaCenterintheeast.
ThisSeptember15,2017,RecoveryPlan,withoutthePlanBoption,willdemonstratethe
followingtothesatisfactionoftheFTA:
1. HARThasthemanagementandtechnicalcapacityandcapabilitytosuccessfully
completethefullscopeofworkoftheProjectdefinedintheFFGA.
2. HARThasdevelopedarealisticandachievableupdatedCapitalCostEstimateforthe
completionoftheProject.
3. HARThasdevelopedarealisticandlogicalupdatedProjectSchedulethatwillassure
thefullProjectcanbeopenedtoRevenueServicebytherevisedRevenueService
DateofDecember2025.
4. TheGrantee(CityandCountyofHonolulu),workingcloselywithHART,has
identifieddedicatedsourcesoffundingwhichwillprovideadditionalfundingto
makeupthedifferencebetweentheoriginalFFGAProjectCostandtheupdated
CapitalCostEstimate,throughlocalfinancialresourcesthatarestable,reliable,and
committedtotheProject.
ThisRecoveryPlansetsforthdocumentationinsupportofeachelementoutlinedaboveand
providesanupdatedreportonthestatusofthecurrentProject.Additionally,thisRecovery
PlanincludesanupdatedFinancialPlanbasedontheStateLegislativeandsubsequentCity
actionsthathavebeentaken,asdescribedinSection6.2below.
2.2 ProjectDescription
TheHRTPisa20.1milelongfixedguidewayrailsystemfeaturing21stationsthatextends
fromEastKapoleionthewestsideoftheislandofOahutoAlaMoanaCenterontheeast
sideviaHonoluluInternationalAirport.Thealignmentiselevated,exceptfora0.6mile
atgradeportionattheLeewardCommunityCollegestation.Thesystemwillbeoperated
andmaintainedatthe43acreRailOperationsCenter(ROC,formerlyknownasthe
MaintenanceandStorageFacility[MSF])nearLeewardCommunityCollege(LCC).
Thesystemalsofeaturesfullyautomated,driverlesstrains;afarevendingsystem;and
passengerscreengates.
Figure21 HRTPSystemOverview
2.3 ProjectHistory
TheProjectwasprecededbydecadesofrailplanningdatingbackto1967,whichhasledto
thecurrentLocallyPreferredAlternative(LPA)fortheHonoluluHighCapacityTransit
CorridorProjectextendingfromEastKapoleitoAlaMoana.Belowisachronologyofkey
eventsintheProject'shistory:
July2005:TheHawaiiStateLegislatureauthorizedandinAugust2005the
HonoluluCityCouncilapproveda0.5%GETsurchargetoprovidenonfederallocal
fundingforanewrailtransitsystem.
August2005:TheCityDepartmentofTransportationServices(DTS)initiatedan
AlternativesAnalysisfollowingtheFTASection5309NewStartsProgram(now
knownastheFTAMajorCapitalInvestmentGrantProgram).
January2007:TheCityselectedtheLPA,steelwheelonsteelrail,andbegan
collectingtheGETsurcharge.TheCitytheninitiatedworkontheProject's
EnvironmentalImpactStatement(EIS)andpreliminaryengineeringforthesystem.
February2007:TheHonoluluCityCouncilpassedCityCouncilResolution07039
approvingtheselectionoftheMinimumOperatingSegment(MOS)fromEast
KapoleitoAlaMoanaCenter,viaSaltLakeBoulevard.TheMOSwassubsequently
amendedtoservetheHonoluluInternationalAirportdeferringtheSaltLake
portionofthealignment.
November2009:TheCityexecuteditsfirstcontractfortheproject,aDesignBuild
(DB)servicescontractwithKiewitPacificCompanyfortheWestOahu/Farrington
HighwayGuideway(WOFH).
June2010:TheFinalEnvironmentalImpactStatement(FEIS)fortheProjectwas
approvedbytheFTA,withpublicationoftheFEISonJune25,2010.
November2010:OahuvotersapprovedaCityCharterAmendmentestablishing
HART,tocreateasemiautonomouspublictransitauthorityresponsibleforthe
planning,construction,operation,maintenance,andexpansionoftheCity'sfixed
guidewaymasstransitsystem.
January2011:ASection106ProgrammaticAgreementwassigned.FTAissuedits
environmentalRecordofDecision(ROD)fortheProjectonJanuary18,2011,
providingpreawardauthorityforutilityrelocationandacquisitionofrailvehicles.
February2011:TheHARTRealEstateAcquisitionManagementPlanwasapproved,
providingpreawardauthorityforRightofWay(ROW)acquisition.
December19,2012:TheCityandtheFTAsignedanFFGAforaprojectconsistingof
20.1milesand21stations,atotalestimatedprojectcostof$5.12billionwitha
committedfederalshare(subjecttoannualcongressionalappropriations)of
$1.55billion,andafullsystemrevenueservicedateofJanuary31,2020.
January2016:AfiveyearextensiontotheGETwasadoptedandwasanticipatedto
yield$1.2billioninadditionallocalfundstotheProject.
June2016:OnJune6,2016,theFTAdirectedHARTtosubmitaRecoveryPlanby
August7,2016,whichdemonstratesthatHARTisworkingtocontaincostsand
minimizedelaysinscheduleimpact.InJuly2016,FTAextendedthedeadlineto
submittheRecoveryPlantoDecember31,2016.Subsequently,FTAfurther
extendedthedeadlineforthesubmissionofthisRecoveryPlantoApril30,2017.
August24,2017:HARTcancelledtheCityCenterGuidewayandStationsDesign
BuildsolicitationafteranalysisshowedthatcancellationwouldbeinHART'sbest
interesttodoso.Ithasbeenover2yearssincetheoriginalCCGSRequestfor
Proposals(RFP)wasissued,andsincethentwoofthethreeofferorshavesignificant
changestotheirJointVentures.Cancellingthesolicitationwouldopenthe
solicitationtootherpotentialofferorstoparticipateinthesolicitation,whichwould
enhanceandencouragecompetition.HARTalsoisoftheopinionthatchanges
contemplatedtotheRFParesosignificanttheynecessitatearesolicitation.This
particulardelayandthecontinuationoftheutilitiesrelocationdesigndocuments
enablesHARTtofurnishtonewsolicitorssignedandsealeddrawingsminimizingthe
associatedrisksassignedtothisrelocationwork.
September5,2017:TheHawaiiStateLegislaturepassedSenateBill4,2017Special
Session(SB4),enactedintolawbyGovernorIgeasAct1,whichextendstheGET
surchargeforthreeadditionalyears,throughDecember31,2030,andraisesthe
TransientAccommodationTax(TAT)from9.25%to10.25%for13years,until
December31,2030.Thesemeasureswillprovidefinancialcapacityneededto
completetheprojectasplannedintheFFGA.
2.4 MajorProjectIssues
TheProjecthasbeenhamperedbyanumberofeventsthatwerebeyondtheanticipationof
theoriginatingparties.TheseincludedissuesrelatedtotheNationalEnvironmental
ProtectionAct(NEPA)involvingthreefederalcooperatingagenciesthataroseverylatein
theEISprocessastheProjectwasobtainingfinalsignoffsfromtheseagencies(which
affectedthealignmentoftheProjectneartheairport),historicpreservationissuesatthe
slatedPearlHarborStation,andaNativeHawaiianProgrammaticAgreementmatter.Some
earlycontractsalsowereawardedbeforefinalagreementshadbeenreachedwithvarious
thirdpartiessuchastheUniversityofHawaii(UH)anditsassociatedcampuses,theStateof
HawaiiDepartmentofTransportation(HDOT),HECOandotherutilities,andotherStateand
Cityagencies.
Inawardingsomeearlycontracts,theProjectdidnotsufficientlyaccountforthenecessary
integrationandinterfaceactivitiesbetweenthemajorcontractorsorhaveafullyintegrated
MasterProjectSchedule.Whilesomeearlycontractawardswerewellintendeddecisions
designedtostimulatelocalconstructionjobsinthewakeofthe"GreatRecession"of2009
to2011,whenviewedinhindsightthosedecisionsweremistakesonthepartofHARTthat
resultedinsubstantivecostandscheduleimpactsontheProject.Additionally,thesingle
mostcostlyimpacttotheProject,whichwasbeyondthecontroloftheProjectsponsoras
furtherdescribedbelow,wasthecessationofallconstructionactivitiesfor13months
becauseofprojectlitigation,whichhadacascadingeffectoncostandschedule.
BelowisasummaryofkeyissuesandtheirimpactstotheProject:
AsaresultoftheNTP,AIS,andTCPdelays,theProjectincurred$172millionindelay
costsonthetwowestsideguidewayDBandtheMSFDBcontracts.
TheAISdelaywasa13monthdelaythatoverlappedwiththeNTPdelaysonthe
westsideguidewayandMSFDBpackages.
WOFHspecificallyincurredatotaldelayof23.5monthsanddelayrelatedcostsin
theamountto$107millionwhichincludesconstructionescalation.(Note:This
amountreflectsonlytheWOFH,KHG,andMSFcontractdelaycosts.Itdoesnot
includeassociatedcosts[agencystaff,rent,etc.]orlegalcoststhatresultedfromthe
delays.)
InJanuary2011alawsuitwasfiledinstatecourtthatchallengedtheCity'sinitiation
ofconstructionofthefirstsectionoftheProjectwithoutcompletionof
archaeologicalsurveysandapprovaloftheStateHistoricPreservationDivisionofall
fourprojectsectionsforthefull20.1milesoftheProject.TheCity'sactionwas
consistentwithlongstandingpracticeinthestateforlargeconstructionprojects,as
wellasbeingconsistentwithfederalregulations.
TheinitialrulingbytheFirstCircuitCourtoftheStateofHawaiiwasinfavorofthe
Cityandfederaldefendants,citinglongstandingconstructionpracticeinthestate.
TheState'sIntermediateCourtofAppealsupheldthelowercourt'srulingonappeal.
ThecasewasthenappealedtotheHawaiiSupremeCourtin2012,whichruledin
favoroftheplaintiffbyavoteof90.Thisdecisionresultedinacessationofall
constructionactivitiesfornearly13monthspendingthecompletionof
archaeologicalsurveysfortheentireproject.
AsecondlawsuitwasinitiatedinFederalDistrictCourtinMay2011,byplaintiffs
claimingthattherehadbeeninadequateconsiderationofalternativesintheEISwith
regardtoNPEAandculturalandhistoricalsites.InNovember2012,thecourtheld
thatonlythreeofthemultipleclaimsbytheplaintiffsrequiredfurtheranalysis.
However,thecourtalsoimposedaninjunctiononfurtherworkontheCityCenter
segmentoftheProjectandfrozefurtheracquisitionofrealpropertyindowntown.
TheCityinitiatedaSupplementalEnvironmentalImpactStatement(SEIS)toaddress
allthreeissuesinDecember2012,whichwascompletedandreleasedinJune2013.
UponreviewoftheSEISbytheDistrictCourt,thecourtdismissedalloftheclaimsof
theplaintiffs.
TheplaintiffsthenappealedtheDistrictCourtdecisiontotheNinthCircuitCourtof
Appeals.InFebruary2014,theNinthCircuitCourtofAppealsupheldthelower
court'sdecision,liftingtheinjunctionand,withthepriorresolutionofthestate
courtlawsuit,allowedtheProjecttoresumeconstruction.
InMarch2011,theCityselectedthecontractorforthevehicle/coresystemsDesign
BuildOperateMaintain(DBOM)Contract,AnsaldoHonoluluJointVenture(AHJV).
Protestsbythetwounsuccessfulcontractorsresultedinaninemonthdelayin
awardingtheAHJVcontract,whichinturnresultedina$8.7millionsettlementof
delayclaimsbyAHJV.Thesecostshavegrownfurtherasaresultofyetadditional
collectiveprojectdelays.
Asdelaysbegantobuildasaresultoftheseevents,itbecameevidentthatthe
failureoftheProjecttosufficientlyaddresstheintegrationbetweenthemajor
contractorsorhaveinplaceafullyintegratedMasterProjectSchedule,aswellas
majorassumptionsforfuturecontractsthatwouldlaterprovetobeincorrect,
culminatedinsubstantialnegativeconsequencesintheProjectcostandschedule.
Tocompoundthisproblem,theProjectexperiencedextraordinaryincreasesinthe
costofconstructionfollowingthesedelays,asdocumentedintheRyderLevett
BucknallComparativeCostIndexofmajorUnitedStatescitiesfrom2009through
2016(AppendixD).Duringtheperiodofmid2009to2011,whencostestimatingfor
theFFGAwasbeingcompleted,UnitedStatescitiesincludingHonoluluwent
througharelativelyflatperiodofescalationinconstructioncosts.Beginningin2012,
constructioncostsescalatedsignificantly,withHonolulu'sconstructioncosts
escalatingtothehighestconstructioncostsamongmajorcitiesintheUnitedStates,
maintainingthatpositionforfouryearsthroughthefourthquarterof2016.
InMarch2013,HECOstatedthatasa"ruleofthumb"theminimumhorizontal
workingclearancesfortheirexistingoverheadlineswere50feetfor138kVlines,
40feetfor46kVlines,and30feetfor12kVlines.Basedonrecommendationsfrom
theProject'sengineeringanddesignconsultants,actiontoaddressthesespecified
clearanceswasdeferred.Thisdecisioncontinuestohavesignificantcostand
scheduleramificationsontheProject.
InAugust2014,thebidsreceivedfortheconstructionofninewestsiderailstations
exceededbudgetestimatesbymorethan63%,or$100million,signalingamajor
changeintheconstructionmarketandresultinginthecancellationofthestation
solicitation.
Inthewakeofthewestsiderailstationcontractcancellation,aProjectRiskUpdate
presentationwasmadetotheHARTBoardofDirectorsinNovember2014,inwhich
HARTdeterminedthattheProjectCostwouldbe$550millionto$700millionover
theFFGAbudget.Further,HARTwasfacedwithapersistentfundingdeficit
stemmingfromoverestimatingtherevenueyieldfromtheGETsurchargeandfroma
fundinggaptoreplace$210millioninFTASection5307funds(thesefundswere
includedintheFFGAFinancialPlan,butthenwererequiredtobewithdrawnfrom
theProject'sFinancialPlantoassurethosefundsforusebyTheBus),resultingina
totalestimatedbudgetgapof$910million.
InJune2015,theCityandHARTobtainedapprovalofafiveyearextensionofthe
GETsurchargefromtheStateLegislature.Thisfiveyearextensionwasanticipatedto
yield$1.2billioninadditionallocalfundstotheProject,whichincreasesthe
local/federalmatchratiooftheProjecttoa75%local/25%federalmatch.
TheHonoluluCityCounciladoptedanordinancetoextendtheGETsurchargeforan
additionalfiveyearsto2027inJanuary2016.
InJanuary2016,theCityrecommittedtotheProjectandannounceditsintentionto
seekanextensionoftheGETfromtheStateLegislatureandtheCityCounciltocover
thefundinggap,consistentwiththeFFGAassurancesimposedontheCityinthe
eventofafundingshortfall.
InMay2016,HARTreceivedpreliminaryvaluesfortheIndependentCostEstimate
(ICE)fortheCityCenterGuidewayandStationsDBpackagethatindicatedan
estimatedcost$719millionhigherthananticipated.Withtheprojectedfunding
shortfallfortheProject,theprocurementoftheCityCenterGuidewayandStations
DBpackagewassuspended,whichshiftedtheentirescheduleouttotheendof
2024.
InJune2016,theFTAdirectedHARTtosubmitaRecoveryPlan;indevelopingits
RecoveryPlan,andinparticularinaddressingoverallprojectmanagementand
managementcapacityandcapabilityissues,HARThasidentifiedandmadeagood
faithefforttoactonthelessonslearnedinthepriorstagesofProjectdevelopment.
3 ManagementCapacityandCapability
ThepurposeofthissectionistodescribeHART'sorganizationalstructure,includingkey
personnel,andtodemonstrateitsmanagementandtechnicalcapabilitiestosuccessfully
completetheProjectwithintheproposedbudgetandschedule.
3.1 Overview
TheHARTProjectManagementPlan(PMP)describestheoverallmanagementapproachfor
theHRTPandhasbeenextensivelyupdatedsinceRevision5.Thesixthrevisionfocuseson
managementoftheprojectduringconstructionandaddressescommentsand
recommendationsbytheFTA'sProjectManagementOversightContractor(PMOC)on
projectmanagementandcontrolprocedures.HARTwillsubmitthePMPbyNovember2017.
3.2 ProjectStaffingandPersonnel
Figure31: OrganizationalChartandKeyDepartmentalUpdates
SeniorManagement

DesignandConstructionDivision

Procurement,Contracts,andConstructionClaimsDivision

3.2.1 HARTBoardofDirectors
HARTisgovernedbya10memberBoardcomposedoftheDirectoroftheState
DepartmentofTransportation,theDirectoroftheCityDepartmentofTransportation
Services,andsixvolunteersfromthecommunity:threeappointedbytheMayor,threeby
theCityCouncil.TheDirectoroftheCityDepartmentofPlanningandPermittingalsoserves
asanonvotingmember.ThevotingmembersappointthetenthmembertotheBoard.
TheBoardisthepolicymakingbodyoftheauthorityandappointsandevaluatestheHART
ExecutiveDirectorandCEO.TheBoardadoptsHART'sannualoperatingandcapitalbudgets,
adoptsasixyearcapitalprogram,adoptsrulesandregulations,andcarriesoutotherduties
asauthorizedbylaw.TheBoard'spowersareprimarilystatedintheCityCharterSection
17104.
InNovember2016,votersapprovedaCharteramendmentclarifyingtheresponsibilityof
theHARTBoardofDirectorstoestablishpoliciesandregulationsregardingthe
developmentoftherailsystem,theinternalmanagementandorganizationofHART,and
theallocationofdecisionmakingauthoritybetweentheBoardandtheagency'sExecutive
Directorandstaff.Tothatend,theBoardwillbeengagingininternalmanagement
policymakingregardingitsapprovalofsignificantdocumentssuchastheRecoveryPlanand
willapprovethesameinthecomingmonths.Inaddition,theCharteramendment
additionallyprovidesfortheestablishmentofaratecommissionandplacedtheoperations
andmaintenanceresponsibilitiesforbus,paratransit,andrailwiththeDTS.
ThecurrentcompositionoftheHARTBoardofDirectorsisparticularlywellsuitedto
addressthecurrentneedsoftheHRTP.Memberscontributetheirsubstantialknowledge
andexperienceinvarieddisciplines,includinggovernment,policy,construction
management,financing,laborrelations,law,publicplanning,andtransportation.Board
membersprovideasignificantlevelofpolicyguidanceandsupportinfurtheranceofthe
Project'sgoals;mostrecently,membershavedevotedasubstantialamountoftimein
advancingGETextensionlegislation,theRecoveryPlanfortheFTA,andthehiringofthe
InterimExecutiveDirectorandCEO,aswellasthesearchforandappointmentofthe
permanentExecutiveDirectorandCEO.
3.2.2 ExecutiveDirectorandCEOSearch
TheBoardofDirectors,withtheassistanceofexecutivesearchfirmKarrasConsulting,
identifiedAndrewS.Robbins,P.E.,asHART'snewpermanentExecutiveDirectorandCEO.
Mr.Robbins,whohasextensiveexperienceinprojectmanagementandengineering,
systemsengineering,constructionandinstallation,operationsandmaintenance,business
development,aswellassubstantialfirsthandknowledgeofdriverlesstransitsystems,took
thehelmatHARTonSeptember5,2017.InterimExecutiveDirectorandCEOKrishniahN.
MurthyisworkingcollaborativelywithMr.Robbinstoensureasmoothtransition.See
AppendixEforMr.Robbins'curriculumvitae.
3.2.3 QualificationsofKeyPersonnel
HARTunderstandsthecriticalnatureofconsistencyasitrelatestoprojectmanagementand
thesuccessoftheProject.ThisunderstandinghasledHARTtoestablishthefollowingcore
groupofindividualswhohaveextensivetransitandconstructionexperienceandthevalues
requiredtosuccessfullycompleteaprojectofthismagnitude:
AndrewRobbins,ExecutiveDirectorandCEO:Mr.Robbinsisalicensed
professionalengineerintheU.S.withacareerspanningmorethan37years.
Mr.Robbinshasbeeninvolvedinnumeroustransitsystemslocateddomestically
andinternationally,atairportsandwithinurbanareas,havingworkedasaField
Engineer,ProjectEngineer,ProjectManagerandBusinessDevelopmentExecutive.
Mr.Robbinshasaspecialtyindriverlesstransitsystemswithhandsonexperiencein
projectmanagement,projectengineering,systemsengineering,constructionand
installation,operations&maintenanceandbusinessdevelopment.Mr.Robbinshas
mostrecentlyledeffortsinprojectdevelopment,biddingandcontractnegotiations
formanytransitprojectsintheUnitedStatesincludinginDenver,LasVegas,San
Francisco,andLosAngeles.
KrishniahMurthy,InterimExecutiveDirectorandCEO:Mr.Murthyhasover
45yearsofprofessionalexperienceinrailtransitprograms.Inhislastassignment
beforehisretirement,Mr.MurthywastheExecutiveDirectorofTransitProject
DeliveryfortheLosAngelesCountyMetropolitanTransportationAuthority(MTA)
from2007to2014.Attheendofhistenure,theprogramhadapproximately
$9billionofprojectsinvariousstagesfromconcepttoconstruction.PriortohisMTA
engagement,Mr.Murthyhad35yearsoftransitprojectdesignandconstruction
experienceworkingonvariousU.S.andinternationalprojectsincludingAtlanta,
DallasFortWorth,Phoenix,SanDiego,LosAngeles,NewDelhi,andLondon.
C.S.Carnaggio,ProjectDirector:Mr.Carnaggiohas35yearsofexperiencein
designandconstructioninthetransportationindustry,withthelast18yearsofhis
careerbeingexclusivelyintransit.Hebringsauniquecombinationofexperienceat
bothfederalandregionaltransitagencies,havingservedforfouryearsatFTAasthe
DirectorofEngineeringand14yearsdeliveringcapitalprojectsforregionaltransit
agenciessuchasWMATAandMTAinBaltimore.Havingdeliveredmajorprojects
verysimilartotheHRTP,Mr.Carnaggio'sleadershipexperienceandtransit
knowledgeprovidesHARTwiththeassurancethatsounddeliverydecisionsare
made.
RobertYu,ChiefFinancialOfficer:Mr.Yuhasover25yearsofexperienceinthe
publictransportationindustry.PriortojoiningHARTinMarch2017,heservedas
SeniorVicePresidentandDeputyGeneralManagerforOahuTransitServices,Inc.
(OTS),theoperatorandmanagerofHonolulu'sbusandhandivansystem,from
2009to2017andVicePresidentofFinanceandAdministrationfrom1992to2009.
Beforehiscareerinpublictransportation,Mr.Yuheldvariousfinancialandaudit
positionsatChevronUSAandGrantThorntonCPAsinSanFranciscoandHawaiian
ElectricIndustriesinHonolulu.HeisaCertifiedPublicAccountant.
FrankKosich,DirectorofEngineeringandConstruction:Mr.Kosichhasover
37yearsofprojectandprogrammanagementexperienceandhasmanagedmajor
projectsintheUnitedStatesandabroadbothintheprivatesectorandasa
CommanderandDistrictEngineerwiththeU.S.ArmyCorpsofEngineers.Hismost
recentassignment,priortojoiningtotheHARTproject,waswithMetropolitan
TransitAuthorityCapitalConstruction,asSeniorResidentEngineerfortheSecond
AvenueSubwayCoreSystemscontractinNewYorkCity.Hisoversightandrelevant
experiencematcheswellwiththecurrentongoingdesignandconstruction.
NicoleChapman,DirectorofProcurement,Contracts,andConstructionClaims:
Ms.ChapmanhasbeenwithHARTforfouryearsandhasover20years'experience
inprocurementandcontracts,includingservingasprocurementandcontractslegal
counselfortheCityandCountyofHonoluluandtheCityandCountyofSan
Francisco.Priortoworkinginthegovernmentsector,sheworkedforadefense
litigationlawfirmandservedasinhousecounselintheBayAreaandHongKong.
Ms.Chapman'slocalknowledgerelatingtoconstructioncontractprocurementand
interpretationofagreementlanguageaddstoHART'sabilitytomanagecontracts.
LynnHarmon,DirectorofProjectControls:Ms.Harmonhasover25yearsof
industryexperienceworkingforsomeofthelargestpublicsectorclientsaswellas
BlueChipprivatesectorcompanies.Shehasexperienceinprovidingcost
engineering,estimating,scheduling,changemanagement,riskmanagement,
progressreporting,andcontractsadministrationthroughoutthelifecycleofboth
traditionalandcomplexDesignBuildprojects.Ms.Harmon'svariedexperience
includestransitprojectsacrosstheMiddleEastandLosAngelesMetroHeavyRail
SubwaySystems,LightRailSystems,andMetrolinkCommuterRailSystem.Sheis
currentlyaTreasurerontheWomeninTransportationHawaiiChapter.
AbbeySethMayer,DirectorofPlanning,Permitting,andRightofWay:Mr.Mayer
hasapproximately15yearsofexperienceleadingplanningorganizationsinthestate
ofHawai'i,includingservingastheStatePlanningDirectorfrom2008to2011.For
thelast6years,heservedasthepresidentandfounderofMayer&Associates
Consulting,Inc.,aHonolulubasedconsultingfirmparticipatinginawidevarietyof
projects,includingprivatedevelopments,governmentplanninginitiatives,
governmentfinancedaffordablehousingdevelopments,andlargescalealternative
energyprojects.Mr.Mayer'slocalknowledgeandexpertiseconcerningthe
programmaticrequirementshasearnedtheconfidenceofFTAandPMOC.
StuartJackes,DirectorofOperationsandMaintenance:Mr.Jackesbrings37years
ofexperienceinautomatedrailtransitoperationsandmaintenance,policy,
planning,regulation,economicsandlogistics,muchofitwithSkyTraininBritish
Columbia.Hehasbeeninvolvedwithanumberofsystemexpansionprojectsand
wastheProjectOperationsManagerontheTransLinkEvergreenLineRapidTransit
Projectandbringsacareerofextensiveknowledgeofautomatedrailtransittothe
HARTproject.Mr.Jackes'handsonexperienceinfullyautomatedtransitoperations
wellservestheneedfordetailscriticaltotheoperationandsafetyoftheHRTP.
RalphMcKinney,ChiefSafetyandSecurityOfficer:Mr.McKinneyhas19yearsof
experienceinsafetycertificationinthetransitindustry.Heisatechnicalexperton
programs,regulation,andcompliancewithFTA,FRA,TSA,USDOTSSO,andAPTA
policiesandstandards.Mr.McKinney'sexperiencealsoincludesactingasaliaison
withStateandFederalagenciesregardingsafetyandsecuritycertificationatthe
ChicagoTransitAuthorityandtheUtahTransitAuthority.
JeffSiehien,ActingDeputyDirectorCoreSystems:Jeffhas25yearsofexperience
inengineeringandprogramdevelopmentformajortransitsystems.Hisexpertiseis
indevelopingnewtechnologysystemsandupgradingexistingsystems.Additionally,
Jeff'bringsafullunderstandingofdesignimpactsonridership,operationsand
maintenance.HispreviousexperienceworkingforNYCTransitincludedtrainingand
mentoringengineersinoperationsandmaintenancethroughoutthedesign,
construction,andtestinglifecycleofthesystem.Jeffalsodevelopingtraining
protocolsaspartofhisresponsibilitiestomakesurepersonnelwasqualifiedto
operateandmaintainthesystem.
KaiNaniKraut,StakeholderEngagementManager:Ms.Krautisalicensedengineer
andacertifiedconstructionmanagerwhobringsrelevantknowledgeandexperience
fromworkingdirectlyfortheCityandCountyofHonoluluastheformerDeputy
DirectorofTransportationServicesandpreviouslyforFHWAHawai'iDivisionasthe
UtilityLiaisonandTransportationEngineerforOahu,Maui,andAmericanSamoa.In
herover23yearsofexperience,Ms.Krauthasrepresentedthefederal,state,and
citygovernmentsandunderstandstherequirementsoffederallyfunded
constructionprojects.Withinthelast15yearsinHawaii,shehasparticipatedin
someofthelargesttransportationprojectsinthestateandseveralARRAtransit
projectswiththeCity.Sheunderstandsthestakeholders'needsandpoliciesandis
abletonavigatethemtoaidaproject'ssuccess.
ThomasPeck,WestAreaConstructionManager:Mr.Peckisalicensedengineer
withover35yearsofsuccessfulleadershipinabroadrangeofmultilevel
managementpositionsincludinginternationalexperienceinengineering,
contracting,construction,andprogram/projectmanagement.Hisexperience
includesthe$4.2billionSecondAveSubwayprojectinNewYorkCityandthe
$35billionRoadsandDrainagePrograminQatar.Heheldmultiplepositionsinthe
USArmyCorpsofEngineersincludingholdingaFederalcontractingwarrant.
JohnMoore,ActingEastAreaConstructionManager:Mr.Moorehasover46years
ofexperienceinmanagement,design,andconstructionofmajorpublicandprivate
worksprojects,includingtransit.AsalicensedcontractorinFlorida,hewasthe
qualifierforStoneandWebsterandlaterforURS.Mr.Moorewasalsorecognizedby
thecourtsinDadeCountyFloridaasanexpertwitnessinConstruction.Forthepast
sixyearswithHART,hehashadvariousresponsibilities,includingbeingtheDeputy
ResidentEngineerfortheKHGcontract;leadingthecompletionoftheAIStrenching;
beingtheleadinresolvingthedelayandescalationclaimsreceivedfromKiewitfor
theMSF,WOFH,andKHGcontracts;beingtheProjectManagerfortheOnCall
ContractorandtheElevatorandEscalatorcontracts;andiscurrentlytheInterim
ConstructionManagerfortheAirportandCityCenterportionsofthesystem,
includingtheremainingtwelvestations.
PaulJohnson,DirectorofRiskManagement:Mr.Johnsonhas37yearsof
experienceinfacilitiesprojectmanagementandconstruction,includingleadingcost
containment/costreductionsessionsonmanyprojectsandprogramsincludingrail
transit,highways,andwatersystems.HeisaCertifiedValueSpecialist(CVS)through
SAVEInternational,andasanexperiencedfacilitatorisworkingwithHARTteamson
riskidentificationandmitigationsuchasutilityinterface.Mr.Johnsonrecently
completeda2yearassignmentasDirectorofLogisticsontheWorldCup
ProgrammeinQatar.TheassignmentinvolvedclosecoordinationwithQatarRailfor
developmentofthecountry'srailtransitstationsandthetunneledguideway.
Mr.Johnson'sexperienceasanowner'srepresentativeandconstructionmanager
includesnumerousformsofprojectdeliverysuchasDesignBuild,DesignBidBuild,
andPrimeContracting,allofwhichhaveapplicationsontheremainingcontractsin
theHARTproject.
3.2.4 StaffingStrategyandApproach
HARTcontinuestoactivelyrecruitthroughitswebsite,industryperiodicalsatthenational
level,andlocalmedia,aswellasoutreachtolocalagenciesandengineeringfirms.HARThas
successfullyrecruitedhighlyqualifiedindividualstofilltheChiefFinancialOfficer,Deputy
DirectorofProcurement,DirectorofDesignandConstruction,SafetyCertificationManager,
andRiskManagerpositions,withthefullsupportoftheOfficeoftheMayor.HARTis
currentlyinterviewingcandidatestofilltherecentlyvacatedEastAreaConstruction
ManagerandDeputyExecutiveDirectorpositions.HARTanticipatesfillingthesekey
positionswithinthenextseveralmonths.RecentmeetingswiththeOfficeoftheMayorand
theCity'sDepartmentofHumanResourcestoestablishaplanthatprovidesstabilityfor
essentialProjectpersonnelhavebeenencouraging.ThepassageofSB4andAct1has
providedHARTanopportunitytolookattheProjectdeliveryasawhole,includingrevenue
operations.Thisopportunitywillbewedtoanevaluationoftheorganizationstructureasa
whole,includingevaluationofneededcorecompetencies.Staffinglevelsandmanagement
competenciesrequiredforcosteffectivedeliveryoftheProjectwillbetheguidingfactor.
HART'shiringandretentionissuesarenotspecifictorailconstructionpersonnelbuthave
occurredatalllevelsofstaffingandinalldivisionofHART,includingtheadministrative
officeswhichdonotrequireanyformofrailorevenconstructionexperience.HARTisalso
committedtoemployeeretentionbydevelopingasuccessionplanfocusedoncareer
progression,preparationforleadershiproles,retaininginstitutionalknowledge,andfair
compensationforlocalstaff.Inaddition,HARThastakenthefirststepstocreatean
employeefriendlyworkingenvironmentwithminimalstressandacorporatepolicyof
positivecommunicationandstaffsupport.
3.3 HARTProcessandProcedureChanges
ThefollowingsectiondescribeschangestoHART'sprocessesandprocedureswhichhave
beenimplementedtocontrolcosts,maintainschedule,andprovidecredibilityinreporting
movingforward.
3.3.1 ManagementofCurrentContracts
3.3.1.1 HistoryofHARTChangeProcedure
HART'sChangeManagementprogramattemptstominimizethefinancialimpactofContract
ChangeOrderstotheProject.WhileChangeOrdersarenotcompletelyavoidable,proper
policiesandprocedurescanminimizetheirnumberandseverity.HARThasengagedthe
servicesofMr.HenryFuks,whowasaLosAngelesCountyMTAconstructionmanagerfor
over2decadesandhasvastexperienceinmanaginglargescaleprojectswithsimilar
challenges.InApril2015,HARTestablishedaContractAdministrationDivisioninaneffortto
streamlineandbringuniformitytothecontractchangeprocess.Additionally,HART
recognizedchallengesthathadnotbeenaddressedbytheinitialContractChange
Procedure(5CA11)andreviseditaccordingly.Thefollowingkeyareaswereaddressed:
Revision1(August2015):
TheroleofContractManagers,whowouldreviewmeritdeterminationand
negotiationstrategymemos,wasestablished.
ContractManagersweregiventheresponsibilitytopreparetheChangeOrder
documentstostreamlineandbringuniformitytotheprocess.
ContractAdministrationimplementeda"singleChangeOrderfile"process,
whichincludedchecklistsofallrequireddocuments.
ATimeImpactAnalysis(TIA)narrativewasrequiredaspartofthesupporting
documentationforaChangeOrder.
TheProjectManagerwasrequiredtoobtainfundingandfundingavailabilityin
advanceofproceedingwithachange,ratherthanattheendoftheprocess,
whenpresentingthechangeforapproval.
Revision2(September2016):
LanguagewasaddedtoexpresslystatethatHARTdoesnotallow"parceling"or
piecemealingchangestoavoidBoardapproval.(Note:Thislanguagewas
includedinanabundanceofcautionandtodemonstratethatHARTwasnotin
thebusinessofimplementingchangesinthismanner.)
3.3.1.2 ImplementationofFurtherImprovements
InJanuary2017,theInterimExecutiveDirectorandCEOrolledoutachangetotheHART
organizationalchart,wherebyProcurement,ContractAdministration,andConstruction
ClaimsweregatheredunderonedivisionandtheDirectorofProcurement,Contracts,and
ConstructionClaimswouldreportdirectlytotheExecutiveDirectorandCEO.Thischange
wasmadetoinstitutionalizechecksandbalancesforchangeordersbyhavingreviews
conductedbyanentityindependentfromtheProjectManagementteam.
InJune2017,HARTrolledoutRevision3.0ofProcedure5CA11,"ContractChange
Procedure,"inwhichrevisionswereincorporatedtoinstitutemorechecksandbalanceto
thechangeprocedure.Revisionsinclude:
ImplementingaChangeControlCommitteeforallcontractchangesover$500,000.
Thiswillprovidemanagementanopportunitytoreviewthechangefroma
programmaticperspectiveforchangesgreaterthan$500,000orwhereachangeis
discretionary.(Allchangesgreaterthan$1,000,000willcontinuetobesubjectto
HARTBoardapproval,asacontinuedcheckandbalance.)
DelegatingauthoritytothethreeDeputyDirectorsofProcurement,Contracts,and
ConstructionsClaimsDivisiononthefindingofmeritofnondiscretionarychange
requestswithestimatedvalueequaltoorlessthan$500,000tostreamlinethe
changeprocessandminimizedelays.
Establishingtimeprocedureswithtimelinesforresolutionateachphaseofthe
process.Thetimelineenforcementdictatesspeedierresolutionofissues,andthe
issuanceofChangeOrders,whereneeded,willbetimely.
Providingclearerdirectiontothefieldteamontheuseofunilateralchangeorders.
Requiringaschedulenetwork,inadditiontotheTIAnarrative.Thenetworkis
definedasthesequenceofnewactivitiesthatareproposedtobeaddedtothe
existingschedule,whichidentifiesthepredecessorstothenewactivitiesand
demonstratestheimpactstosuccessoractivities.Thiswillallowforamoreeffective
evaluationoftheimpacttothebaselineactivity.
Withtheserevisions,theHARTProcurement,Contracts,andConstructionClaimsDivision
willbeabletoprovidestrongerleadershipinthechangemanagementprocessandwork
closelyandrigorouslywiththefieldteamontheterms,conditions,andspecificationsofthe
contractandproperandsufficientdocumentation.
3.3.1.3 ImprovementstoContractorInterface
CoordinationbetweenContractorstoensuretheplansandspecificationsandworkinplace
ofonecoincidewiththeworkofanother(eitherfollowonorconcurrentwork).Beloware
someissuesthattookconsiderabletimeandefforttocoordinateandresolvethroughour
interfaceprocesses:
PeripheralDevicelocations(PAspeakers,CCTV,firealarms,etc.)
Number,sizesandtypesofconduit(includingcablesegregationrequirements)
SCADAcablingandcoordinationrequirements
Conduitconfigurationsincanopysupports
LocationandconfigurationofCICCabinetsandassociatedconduit
Accesscontrolfordoorentry(cardreaders;electriclocks,strikesandhinges)
CoordinationofbaseplatesinstallationwithPassengerScreenGates
FareGateslocationsandconfiguration
Provisionsinstationlayoutandinfrastructureforfutureelevators
Coordinationandinterfacewiththirdpartiestodiscernrequirements,procedures,
andresolveissuesassociatedwiththedelivery.Keypartnersincludebutarenot
limitedto:
HawaiianElectricCompany
HDOT
CityofHonoluluDPP
USNavy
AlohaStadiumAuthority
DTS
Additionally,HARTrecentlyestablishedaStrategicStakeholderEngagementGrouptolead
engagementandresolutionactivitieswithstrategicpartnersinaforwardlooking,proactive
manner.Thisgroupwilldevelopandimplementstakeholderengagementstrategies
includinginforming,consulting,andinvolvingstakeholderswhererelevantandevaluating
theeffectivenessofthosestrategies.Itisimportanttoensureseniormanagementis
apprisedofissuesandriskstostakeholderrelationshipsastheyarisesothatrisksmaybe
managedeffectively.
3.3.2 ProjectControls
3.3.2.1 ProjectControlsOverview
ProjectControlsincludesthedatagatheringandanalyticalprocessesusedtopredict,
understand,andmanagethecostandscheduleoutcomesofaproject.Foranymajortransit
project,effectiveProjectControlsareacriticalelementofsuccessfulprojectcostand
schedulemanagement.
In2013theProject'sGeneralEngineeringContractor,whoprovidedsignificantscheduleand
costestimatingsupportforHART,wasreplacedwhichcreatedavacuuminknowledgethat
hastakentimetofill.Toaddresstheseissues,andtoprovidemorerobustandeffective
projectcontrolssystem,HARThasobtainedtheservicesofaspecialtyfirmtoevaluatethe
HARTProjectControlsprocessesandprovideasystemassessmenttoexplorewhatis
currentlyinuseandtoassistintheimplementationofanychangesthataredeemed
appropriatetoenhanceeffectivenessandefficiency,toprovideamorerobustsystem
solutiontomanagetheproject.
HARTprimarilyreliesonOracle'sContractManagementSystem(CMS)tomanagethe
project.CMSistheProject'scentraldatarepositoryandreportingsystemtomanagethe
flowofprojectdocumentsandcontrolprojectcost.TheConditionAssessmentReport
identifiedkeysystemandprocessimprovements,asdiscussedbelow:
CMSandtheCity'saccountingsystemarenotconnected,andstaffmembers
manuallyenterfinancialinformationintobothsystems.Manuallyentereddatais
pronetoerrorandtakeslongertoprocessbecauseofduplicationofeffortin
enteringthesameinformationintomultipledatabases.
Bottlenecksexistindocumentprocessingbecauseoflimitationsintheelectronic
sequentialreviewprocess.Duplicationofeffortoccursasprojectstaffarerequired
toenterreviewcommentsmanuallyonhardcopiesandsimultaneouslyelectronically
inthesystem.
Usingmultipledatabasesrequiresmanualreconciliationtodetectmanualdataentry
errors,variances,andotherinconsistenciesbetweenvarioussystems.
DraftingmonthlyreportsrequirestheHARTProjectControlsDivision(Project
Controls)torelyondifferentreportsfromvarioussystemsandmanualinputfrom
otherdivisionseverymonth.HARTcurrentlyhasnosinglecompleterepositoryof
projectdataforreportgeneration.
Thecurrentinterfacecouldbemoreuserfriendly,intuitive,andsimplertouse.
Inresponsetotheissueshighlightedabove,ProjectControlspresentedrecommendations
toexecutivemanagementinAugust2017andisawaitingmanagementdecisiontoproceed
withsystemupgrade.Meanwhile,ProjectControlsiscommittedtosimplifyingand
implementingbusinessprocessesmoreefficiently,centralizingthefocusofinformationon
analysis,reporting,andcommunication.
3.3.2.2 Trends
TheProjecthasundergonemajorscoperevisionsandapprovedchangesyieldingsignificant
costandscheduleimpacts.Indealingwiththisandpotentialcostescalations,Project
Controlsperformsrigorousandcontinuouspredictiveanalysisinkeyareasofwherecosts
canbereducedorscheduledelayscanbemitigated.TheAugust24,2017,cancellationof
theCCGSprocurementhasgivenHARTtheopportunitytoexploreoptionstooptimizecost
andschedule.ProjectControlsisintheprocessofthoroughlyanalyzingthepotentialof
theseopportunities.Asthisanalysisisstillinprocess,thecurrentBasisofEstimateand
BasisofScheduleassumenochangesincethepreviousRecoveryPlansubmission.
ThecurrentbudgetandschedulewillundergoarebaselineoncethisRecoveryPlanis
adopted.Onceestablished,forecastingcostandschedulevariancestotherebaselinewill
bedocumentedthroughanewtrendreportprocess.Thetrendanalysiswillallowforand
documentearlydetectionofpotentialcostoverruns,scheduleslippages,andprojectrisks
associatedwithindividualcontractsorinterfaceelementsoftheProject.ProjectControls
monitorstheapprovedprojectbudgetanddocumentspotentialvariancesthroughoutthe
lifeoftheProject.ProjectControlsisalsotrackinganychangestotheoriginalprojectscope
ofworkwhichresultinanincreasetotheProject'sapprovedbudget,astheycanonlybe
submittedforapprovalbytheBoardafteracommittedfundingsourcehasbeenestablished.
3.3.2.3 CostContingency
ThecostcontingencywillbemanagedasareservefundbyHARTmanagement.Contingency
isallocatedattheContractPackagingPlan(CPP)leveltoaddressanyunforeseencostsor
risksrelatedtodesigndevelopment,construction,andotherProjectconditions.
ContingencyisallocatedbasedoninputsfromHART'sRiskManager,andreducedor
accountedfor,asdesign,construction,andprocurementprogress,uncertaintyandthe
potentialforriskeventsarequantifiedintheRiskModel.Acontingencydrawdowncurve
willbeestablishedandmanagedviatheTrendProcesstoensureappropriatelevelsof
contingencyaremanagedandreported.
3.3.2.4 MasterProjectIntegratedSchedule(MPIS)
TheProjectMasterIntegratedScheduleisthechiefprogrammanagementtoolthatties
informationforallelementsoftheProjecttogetherandprovidesthenecessaryassistance
intheplanningandmanagementofacomplexexecutionplanfortheProject.Itis
developedwithasupportingbasisandassumptionreportandiscomprisedofahierarchyof
programtasksandbenchmarkinterimmilestones,throughbothanInterimandSystem
wideRevenueServicesDate(RSD).
Overthepastseveralmonths,ProjectControlshasundertakenanewcourseinenhancing
theMPISbyshiftingthefocusbacktousingthescheduleasthecentralpointof
communicationinanalyzingprogressandreportingmetricstobothafieldleveland
executivemanagementlevel.InitsreviewsofthepresentstateoftheMPIS,Project
ControlsidentifiedcriticalareasofdeficiencythatwerepreventingtheMPISfrombeing
abletobeusedasatooltomeetthisfocus:
Therewasalackofconsistencyintheuseofactivitycoding,calendars,andWork
BreakdownStructure(WBS)coding.
Thescheduleupdatingproceduresneededtoberevised.
TherewasalackofownerspecificandthirdpartyinterfaceinformationintheMPIS
(suchasinclusionofRegulatoryAgencyapprovals,inspections,certifications,and
otherutilityactivitiessuchasutilityrelocationandHECOpowerandactivation
activities).
TherewasadisconnectofinterprojectlogictiesofMajorMilestonesandCritical
AccessMilestones(CAMs)toscheduleactivities.
TherewasanunclearCriticalPathataProgramLevel.
TotalFloatvalueswereinconsistentandexcessive,requiringareviewoflogicties(as
theymaybemissingsuccessortie[s]).
Constraints,specificallyhardconstraints,werebeingusedthroughouttheMPISto
holdadateinthesystem.Thispresentedanissue,inthatitwouldoverridethe
sequencinglogicusedforforecastingandaccuratereportingofanypotential
forecasteddelays.
IntegrationoftestingactivitiesfromthefeederschedulewasmissinginMPIS.
SafetyandSecurityactivitiesarenotupdatedoraccurateintheMPIS.
Therewasalackofdetailforupcomingplannedwork(informationfortheeastside
segmentshownataplanninglevel).
TherewasalackofstandardizedschedulereportsandlookaheadsoftheMPIS
information.
Inthepast,theconstructionportionoftheMPISschedulewasupdatedbyuploadingthe
receivedcontractorprogressedscheduledirectlyintotheMPIS.Thiswasrecognizedasa
concernthatwasquicklyrectified.Presently,monthlyupdatesarevalidatedthroughthe
ResidentEngineer,Inspector,andProjectManager.
ProjectControlshasprioritizeditseffortonperformingthefollowinginitialQualityControl
checksandvalidations:
Totalfloatvalues
Useofconstraints
ActivitycodingandWBScoding
ProjectControlsispresentlyrevisingaffectedactivitiestocorrectoreliminatethemas
appropriate.ManyoftheadjustmentsincorporatedintotheMPISoverthepastseveral
monthsarethebiggestcontributingfactorstoestablishinganintegratedschedule.Itis
importanttonotethatadditionalworkisnecessarywithrespecttotheWBScodingeffort
andcontinueddetailingoftheeastsidesegmentofwork,whichisexpectedtobean
ongoingworkinprogress.
Inaddition,ProjectControlsrecognizedageneraldeficiencyinhowitwasinteractingwith
theProject'sinternalgroups.ProjectControlshasinitiatedastrongercommunicationand
coordinationeffortwiththeHARTDivisionDirectorsthathasresultedinanenhancementof
thedetailandintegrityofthescheduleinformation,specificallyforinterface,turnoverof
activitiesandmilestones,levelsofdetailinformationwithintheschedule,andaccuratelogic
ties.AmajorityoflogicdetailhasbeenincorporatedintheMPISleadinguptotheInterim
RSD,butitisexpectedtobefurtherdefinedforthecompletesystemwideRSDespecially
fortheEastsidesegments,asdetailedinformationfromTesting,SafetyandSecurity,and
otherportionsofworkisincorporated.Informationispresentlyatasummarylevelinthese
areas,butadditionaldetailsfromthesesectionsareanticipatedtobecompletedbyendof
2017.
Inparalleltothisworkeffort,ProjectControlsisreviewingandrealigningitsscheduling
proceduresandmethods;TimeImpactAnalysisobjectivesandrecommendedmethods;and
standardizedreportformatsandlayoutsthatincludeananalysissectionfortheschedule
informationforvisibilityandconsistency.ProjectControl'sobjectivescontinuetobere
alignedtoimplementindustrystandards,specificallyinschedulelevelreporting
presentationsthatwillbeaimedattheproject,senior,andexecutivemanagementlevels
fortheirrespectivereviewandoversight.
ThisrealignmentinProjectControls'processesishasledintothedevelopmentofanew
internalMonthlyScheduleReport,withsectionsfeedingintothepublishedMonthlyProject
StatusReport,asappropriate.Theinternalreportshowsmoredetailedlayoutoptions;a
CriticalPathandAnalysissection;aLookaheadSchedule;aMajorMilestoneandCritical
AccessMilestoneScheduleandAnalysissection;ThirdPartyTurnoverandInterfaces
section;aROWsection;aCoreSystems,Testing,andAnalysissection;andanAreaof
Concernsectiontoidentifypresentandpotentialissues.
ProjectControls'goalistoenforcetheMPISandmakesystemreportsavailableasa
centralizedtoolforcommunicationandpresentationofcurrentProjectstatusandcritical
activities;analysisofanyvariances;identificationofissuesorconcerns,mitigations,or
recommendations;andworkaroundplans.
3.3.2.5 ScheduleContingency
SchedulecontingencyiscarriedasanactivityintheMPISforInterimOpeningandFull
RevenueOpening.TheamountofcontingencyforFullRevenueOpeningiscurrentlythe
differencebetweenanearlier,bestcaseopeningdateandDecember2025.HART'sRisk
ModelquantifiestherequiredcontingencytocovertotalimpacttotheCriticalPathforeach
itemofriskbasedoninputfromtheRiskManager.HARTwillmanageandupdateallrisks
thatmayaffectcompletionoftheProjectwithintheapprovedscheduleonamonthlybasis
andrerunthenetworkmodelonaquarterlybasis.
3.3.3 RiskManagementProgram
TheHARTRiskManagementProgramhelpstoestablishconfidenceintheHRTPcostand
scheduleprojections.TheRiskProgramincludestheidentification,categorization,and
assessmentofrisksandopportunities(R&O)relatedtoeachindividualcontract.Anetwork
riskmodelusesabottomupriskassessmenttodefinecostandscheduleR&Oimpactsfor
eachcontracttoothercontracts,andtotheProjectasawhole.In2016HARTincreasedits
focusonriskwiththeimplementationofformalriskmodelingeffortsthatincluderigorous
analysesandcrossdepartmentalmeetingstodeterminemitigationstrategies.Quantifying
thecostandscheduleR&OimpactswillassisttheProjectteamindecisionmakingandrisk
management.HARThasalsodevelopedamonitorandcontrolprocessthatgenerates
reportstoassisttheRiskManagerandProjectManagersintrackingcontingencyfunds.
TheweaknessesinthewestsideDBcontracts,includingcontractlanguageand
requirementsasdescribedbelow,areidentifiedasrisksforAGSandCCGSandaretop
mitigationpriorities.TheRiskManagementProgramprocessflowchartisdepictedinthe
followingfigures:
Figure34: FieldOfficeRiskManagementFlowchart

Figure35: RiskManagerandProjectControlsFlowchart

Figure36: RiskManagementReportsandCommitteeFlowchart

TheProjectiscurrentlymonitoring215activerisksandhasclosedorretired132riskssince
June2016.Thefollowingisalistofthetopthreeknowncostrisks,whichaccountfor
$384million,or47%ofthetotalriskprofile:
RebaseliningtheCoreSystemsScheduletomeetaFinalOverallBaselineSchedule,
extendingtheRSDfromJanuary2022toDecember2025
WorkingwithHECOtorelocatetheoverheadutilitiesonthewestsideto
undergroundlocations
ConflictresolutionpertainingtocostsforrelocationsofunknownutilitiesintheCity
Centersegment
ThetopscheduleriskisthedelayoftheCoreSystemsscheduleby77months(frommid
2019tocompletionofCCGSin2025).CoreSystemsisdelayedasaresultofdelayed
completionoftheeastsideprojects.
Furtherschedulerisksarelesssignificantandareconcurrentwith(notadditiveto)theCore
Systemsscheduledelay,suchas:
Misidentifiedorunidentifiedutilitieswhichmightoccurinremainingwestside
effortsoreastsidecontracts(adelayof2months)
HDOTorDTSrequirementsforconformancewiththeirstandards(adelayof
6months).
AmorecomprehensivelistingofthecostandscheduleriskfactorsisincludedinAppendixC.
ThisexcerptfromtheRiskTractabilityLogshowshoweachriskfactorincludesadetailed
description,apreresponseestimate,apostresponseestimate,andtheindividualrisk
owners.Italsoshowstheoverallriskandpotentialrecommendedmitigationforthe
program.
HARThasdevelopedariskmanagementplanandiscommittedtoenactingcost
containmentandvalueengineeringmeasuresasaprimarytooltomaintaintheProject's
capitalcostwithintheestablishedbudget.
Ifneeded,HARTalsohasanumberofstrategiestomitigatethesedownsiderisks,including:
AdditionaldebtcapacityavailabletotheCitythroughtheissuanceofGOdebt.
UtilizingitsexistingTECPprogramforshorttermfinancingneeds.
Extendinglocalrevenuesources,inthefollowingorderofpriority,suchas:
Citysubsidies,whichrequiresCityCouncilapproval.
GETsurchargeandTATrevenues,whichrequireslegislativeamendment.
IntheprocessofpreparingthisRecoveryPlan,HARTdeterminedthatcertainlegalrisks
regardingROWacquisitionsandrelocationshadneverbeenfullycapturedinextantrisk
assessmentmodels.Manyoftheserisksrelatetothewiderangeofpossiblejuryverdicts
withregardtopropertyvaluationsineminentdomaintrials.However,giventhesometimes
unpredictableanduncontrollableresultsofjuryverdictsineminentdomaintrials,HART
believesitmostprudenttodisclosethepotentialforriskinexcessofbudgetedamountsin
theupdatedfinancialplan.HARThasdeterminedthatafullreassessmentofitstotal
allocatedandunallocatedrisksfortheentireproject,inclusiveofROWrisks,needstobe
performedatthistimeandhaskickedoffaseriesofworkshopstothisend.Byfully
assessingbothrisksandopportunities,byandrecognizingthatasubstantialportionofthe
workhasalreadybeencompleted,HARTisconfidentthatitscurrentcontingencybudget
willbeadequatetocoverremainingrisksontheProject.
3.3.4 OperationsandMaintenanceRoadmap
TheHARTO&MDevelopmentalDivision(HARTO&M)isdedicatedtocontainingcostsand
maintainingscheduledopeningsbyensuringaseamlesstransitionfromcapitalconstruction
andcommissioningtooperationandmaintenanceofthesystem.Theapprovalofthe2016
CharterAmendment4totheRevisedCharteroftheCityandCountyofHonolulu1973
(2000edition),asamended,placesoperationsandmaintenanceresponsibilitiesforrailwith
DTS.HARTO&MmeetsregularlywithDTSleadershiptoactivelyworkonaroadmapto
revenueservice.HARTandDTSalsodiscussDTS'sbrandinginitiativesfortherailsystemand
faresystemcard.Inaddition,leadershipofHART,DTS,andOTSmeetonamonthlybasisto
developplanningforintermodal(busrail)serviceintegrationandTransitOriented
Development(TOD)toimprovesystemconnectivityneedsinrelationtocurrentdesignand
construction.
HARTO&MisalsoworkingtowardaseamlesstransitiontoDTSbyleadingtheO&M
organizationalandproceduraldevelopment,includingitscontinuedcommitmenttohiring
andtraininglocalstaffandfosteringitsongoingrelationshipwiththeLeewardCommunity
CollegeWorkforceDevelopmentprogram.AproactiveapproachtoO&Mstaffingwillallow
HARTO&Mtobuildinstitutionalknowledgeanddedicateadequateresourcestodevelop
thepolicies,procedures,andprograms(suchastheTransitAssetManagementProgram)
neededtoensureHART'ssuccessduringthetransitiontoandstartofsystemoperation.
HARTO&Mwillalsocontinuetoassistwithensuringoperationalreadinessandcost
containmentbyevaluatingandcommunicatingoperationsandmaintenanceimplicationsto
Projectdecisionmakersandstakeholdersandfacilitatingoperationalandsafetypolicy
discussions.HARTO&MreviewsProjectdocuments,capitalconstruction,Memorandaof
Understanding,andthirdpartyagreementstoensureoperabilityandmaintainabilityand
providesadditionalProjectoversightandconsultationtoProjectteams.HARTO&Misalso
committedtomaintainsystemassetsinaStateofGoodRepairandprovideanalyticsto
prioritizemaintenanceactivities.HARTO&MalsoprovidesoversightoftheCoreSystems
Contractor'sO&Mmobilizationprogress.
InordertoassisttheCityinidentifyingfundingsources,HART,infullcoordinationwithDTS
andOTS,hasputtogetherpreliminarycostestimatesfortheinterimandfullO&Mservice
periods.
3.3.5 SafetyOversight
TheHARTChiefSafetyandSecurityOfficerleadstheHARTSystemSafetyandSecurity
DivisionandisresponsibleformanagingallProjectsafetyandsecurityactivitiesand
ensuringallProjectsafetyandsecurityrequirementsaremet.TheHARTSafetyTeamhas
recentlycompletedtheannualupdateofboththeSafetyandSecurityManagementPlan
andtheSafetyandSecurityCertificationPlan.TheupdatestothoseplansreflectHART's
commitmenttotakingariskbasedapproachtomitigatinghazardswhichhelpsensurethe
safeandsecuredesign,construction/installation,andoperationofthesystem.These
changeswillprovidemoreclarityonwhyanidentifiedhazardshouldbeintroducedand
trackedtoclosure.Thechangeswillalsoprovideclearlydefinedstepsformitigation,
verification,andacceptancethatthehazardhasbeenreducedtoitslowestacceptablelevel
ofrisk.StartingApril2017,theHARTSystemSafetyandSecurityDivisionbeganproviding
quarterlyupdatestotheHARTBoardofDirectors.Theupdateswillincludethestatusof
safetyandsecuritycertification,abriefsummaryonimportantsafetyandsecurityissues,
andactivitiesthatmayimpacttheProjectscheduleandbudget.TheHARTSafetyTeamwill
continuetoeffectivelyandefficientlymanageitsresourcesinsupportofHART'sultimate
goalofdeliveringasafeandreliablepublictransportationsystemtothecitizensandvisitors
oftheHonoluluarea.
AsmandatedbyTitle49oftheUnitedStatesCodeofFederalRegulations(CFR)Section633
andTitle29CFRSections1910and1926,HARTisresponsibleforensuringitsemployeesare
providedwithasafeworkenvironment.Contractorsarealsoresponsibleforprovidingtheir
employees,subcontractors,andvisitorswithasafeandhealthyworkenvironment.The
federalOccupationalSafetyandHealthAdministrationmeasuresasafeworkenvironment
bycomparingthenumberofrecordableincidentstothetotalhoursworked.HART'scurrent
incidentrateof0.76isfivetimeslowerthantheStateofHawaiiaverageof3.8andnearly
sixtimeslowerthanthenationalaverageof4.5.ThislowincidentrateallowsHARTtotake
advantageofpremiumsavingsintheOwnercontrolledInsuranceProgram,paylowerclaim
amounts,andmaintaintheProjectscheduleandbudget.
AsSafetyCertificationiscriticaltothesuccessoftheproject,theHARTSafetyTeamworks
closelywithHDOT,whohastheapprovalauthorityforentryintopassengerservice,andall
oftheProjectteamstotrackandverifyallsafetyrelatedrequirements.Regularmeetings
areheldwithHDOTtokeepitinformedofallsafetyactivitiesinprogress.TheHARTSystem
SafetyandSecurityDivisionwill,uponcompletion,deliverafullycertifiedsystemtothe
HARTO&MDivisionandDTStobeginRevenueServiceOperations.
3.3.6 DecisionMilestoneMatrix
HARTisnowincorporatingaDecisionMilestoneMatrixthatwillhelptomakethenecessary
decisionstomovetheProjectforwardwhileidentifyingpotentialissues,anticipatingthe
deadlinesfordecisionsontheissues,andexecutingmitigationactionstoresolvetheissues.
CombinedwiththeRiskManagementprogram,thematrixwillbecomeapowerfultoolin
makingappropriateprojectdecisionsandensuringthatcriticalissuesremainatanelevated
leveltobereviewedbymanagementfortimelyandeffectivedecisions.Thematrixitselfwill
beownedbytheRiskManager,whowillmeetwithappropriatemanagerstodeterminethe
criticalissuesthatwillbeinneedofdecisionsandwillmeetwiththeProjectDirectorona
weeklybasisforareviewofthematrix.Onamonthlybasis,thematrixwillbepresentedto
ExecutiveManagementandtothePMOCatthePMOCMonthlyProgressMeeting.(TheRisk
ManagementProgramisdescribedinmoredetailinSection3.3.3above.)
4 CostReductionsandContainment
4.1 MethodologyandApproach
HARTcontinuestoapplytheknowledgegainedfromhavingprepared,awarded,and
managedeightmultimillion,multiyearalternativedeliverytransitcontractstoongoingand
futurework.ThiswillbecomeincreasinglyimportantastheProjectmovesintoHonolulu's
denseurbancore.HART'scommitmenttoexploreprojectdeliveryefficiencies,andall
practicalcostcontainmentandcostreductionmeasuresthroughvalueengineeringand
lessonslearned,arefurtherdescribedbelow.
4.2 ProjectDeliveryEfficiencies
HARThasconsistentlysoughttoapplyprojectdeliveryefficienciestodesignand
constructioncontractstoimproveoverallProjectcostandscheduleperformance.Someof
theareasanalyzedbytheProjectteamsincludethefollowing:
Developingacontractpackagingstrategytolowercostsbyincreasingcompetition.
MovingtowardsDesignBuildprocurementandrepackagingwhereappropriateto
lowercosts.
EvaluatinganadvanceutilitiesconstructionpackageforCCGStogetajumpstarton
relocationofinterferingutilitiesandremoveutilityinterferenceriskasmuchas
possibletothefollowonDBcontractorforguidewayandstationswork.
Revisingcontractlanguage,incollaborationwithvariousconstructionand
procurementstakeholders,toprovidecleardirectionandminimizedisputes.
Removingnonessentialdesignandconstructionelementstoreducecost.
PerformingpreconstructionSubsurfaceUtilityEngineering(SUE)andgeotechnical
investigations.
ReviewingvariousProjectfinancingoptions.
ImplementingaMaintenanceofTrafficstrategythatallowsforexpeditedissuance
ofRoadUsePermits.
Utilizingprecastandoffsitefabricationtoreducecostandschedule.
Utilizingpartneringtoresolveconstructionissuesinthefield.
UtilizingaDisputeReviewBoardtominimizeoravoidpotentialimpactsand
prolongedlitigation.
4.3 ValueEngineering
TheRiskManageriscompilingandupdatingallvalueengineeringsuggestionsfromeither
formalorinformalvalueengineeringstudiesandalllessonslearnedfromtheProject.Refer
toAppendixBforcostsavingsimplementedandconsideredthroughvalueengineering.
4.4 LessonsLearned
HARTisholdinglessonslearnedworkshopsapproximatelytwiceperyear,facilitatedbythe
RiskManager,toidentifyanynewcostavoidanceopportunitiesbybeingmindfulofthese
topicsandaddressingthemappropriatelywithinnewcontracts.Themostrecentworkshop
washeldonMay11,2017,withafocusonrightofway,CoreSystemsinterface,utilities,
scheduleincentives,andhowtoprisksarecoveredinRFPs.RefertoAppendixB,ExhibitB1,
forthecurrentlistoflessonslearned.
HARTisexploringotheropportunitiesforcostcontainmentandcostreductionasdetailed
below.
4.5 SoftCosts
HARThasundertakenareviewofitsconsultantstoaddressitssoftcostsandnondirect
constructioncosts,assuggestedbythePMOC.HARTistakingstepstoevaluateconsultant
scope,performance,qualifications,andtechnicalcompetencies.HARTwillalsoneedto
systematicallyevaluatesoftcostsinallprogramareas.Uponcompletionofthesoftcost
evaluations,HARTwillbringrecommendationstotheExecutiveDirectorandCEOandthe
HARTBoardofDirectorsforadoption.
4.6 PeerReviews
HARThasheldnumerouspeerreviewstostrengthentheorganizationbyreceiving
constructiveandunbiasedfeedbackfromindustryleaders.TherecentAPTAreview
providedinsightwithregardstotechnicalmanagementcapacityandcapability,contract
administrationandchangeorderprocess,andclaimsmanagement.HARThasstarted
implementingmostofthesuggestionsfromthislatestreview.Thepeerreviewprocessis
ongoingandadditionalreviewswillberequestedtocontinuetoimproveuponHART
policiesandprocedures.
4.7 HECOUtilityRelocationandAlternativeEquipment
Thecurrentsystemalignmenthasmajorimpactsonmultipleutilities,andHECOin
particularhashadthemostinfluenceontheProjectcostandschedule.HECO'sself
establishedclearancerequirementsconflictedwiththeconstructionandoperationofthe
HARTsystem.HARTandHECOwereabletocollaborateandidentifyalternativeequipment
(vehicles)toaddressworkingclearanceconcernsbetweenHART'srailguidewayandHECO's
highvoltage138kVtransmission,46kVsubtransmission,and12kVdistributionpowerlines
andassociatedsteelorwoodpoles.ThenecessaryhorizontalworkingclearancesthatHECO
requiresare50feetfor138kVpowerlines,40feetfor46kVpowerlines,and30feetfor
12kVpowerlines.RefertoFigure41belowforamapshowingtheareasofconcern.
Figure41: HECOClearanceRelocations

HARThasagreedtoundergroundportionsofHECO'sutilitylines,provideHECOfundsto
purchasethenewalternativevehicles,andprovidestoragespaceforthesevehicles.
BecauseHECOhasgrantedvariancestotheiroriginalclearancerequirementsincertain
areas,theProjectcanavoidcostlyoverheadandundergroundutilityrelocationsandsave
anestimated$138million.TheclearancesolutionsvaryforeachsectionofHART's
alignmentandaredetailedinAppendixI.
TheAGSandCCGScontractsbothhavesignificantHECOutilitiesthatneedtoberelocated
underground.AGSwilluseacombinationofalternateservicevehicles,increasedNavy
easements,andredesigned(reframed)polearmstoavoidundergroundingtheninepole
138kVsystemfrontingJointBasePearlHarborHickam.TheCCGSdesignteamisinthe
reviewprocesswithHECOtoundergroundallofitsutilitylinesalongDillinghamBoulevard.
HECO'sfacilitiesrelocationandcoordinationwiththeProjectDBcontractorsremainahigh
riskitem.
WithintheutilitycongestedCityCentersection,HARTplanstoissueanadvancedutilities
contracttoclearthepathforthefollowonCityCenterGuidewayandStations.This
advancedutilitiescontractwillbebasedonunitratestoallowtheprocurementtoproceed
inparallelwithongoingutilitydesignactivities.Thismethodisintendedtoexpeditethe
startofutilityconstruction.Inaddition,sincetheutilitycontractorwillbecompensated
basedonunitsofworkperformed,thepartiesinterestsshouldbealignedtoworkaround
andmitigateknownrisksintheCityCentersectionsuchasunforeseenutilities,uncertain
timingofpropertyaccess,andinadvertentarchaeologicaldiscoveries.
4.8 InterimOpening
HART,alongwithitsstakeholdersandpartners,arecurrentlyevaluatingthemeritsofa
systeminterimopeningpriortofullprojectcompletiontotheAlaMoanaCenterStation.
Aninterimopeningwouldbeatremendousopportunitytostresstestthesystemand
evaluateperformanceunderreducedservicelevelsandridershipconditions.Asdetailed
below,thereisabsolutelynodifferenceintheoperationalreadinessandsafety
requirementsforanytypeofpassengerservice.HARTacknowledgesthatafterseveralyears
ofinterimservice,therewouldbeadiminishingbenefitinrelationtoO&Mcostand
ridership.Thus,theresponsiblepartiesmustweighthecostversusbenefitastheydecide
onaninterimopeningdate.Irrespectiveofthedecisiontopursueaninterimopening,HART
intendstobereadytooperateandmaintainasystemfromEastKapoleitoAlohaStadiumat
theendof2020.
4.9 CostContainmentandCostSavingsEvaluations
ThefiguresbelowidentifypotentialcostsavingopportunitiesfortheProject.Acomplete
listofcostreductionsandcostcontainmentitemsisprovidedinAppendixB.
Figure42: ProjectScopeChangeCostSavings
Figure43: PotentialCostReductions

5 FulfillmentofFFGAScope
5.1 ProjectProgressandCurrentStatus
TheSystemisscheduledtoopenforpassengerserviceonDecember31,2025,withatotal
costof$8.165billion.Thetotalcostincludescontingencybutdoesnotincludefinancing,
whichisdiscussedindetailinChapter6.TheMasterProjectScheduleshows355daysof
schedulecontingency.
TheProjectiscurrently38%completebasedontheweightedvalueprogressofthe
individualconstructionanddesigncontractsasofAugust2017,whichincludescompletion
oftheROCand10.75milesofelevatedguidewayconstructedfromtheEastKapoleiStation
sitetojustpasttheAlohaStadiumStationsite.TheProjectteamisworkingtotransitionto
anearnedvaluecalculationbasedonconstructionprogressandnotbasedonweighted
expenditurecalculationoftheindividualdesignandconstructioncontracts.
5.2 MajorContractStatus
Majorcontractsthathavebeenawardedandtheirpercentagecompletionareasfollows:
WestOahu/FarringtonHighwayGuideway(99.3%);KamehamehaHighwayGuideway
(96.4%);MaintenanceandStorageFacility(100%);CoreSystems(42.9%);andAirport
SectionGuidewayandStationsGroup(9.8%).WiththerecentawardoftheAGSDBcontract,
HARTcurrentlyhasover$4.27billioneithercompletedorundercontract,whichincludes
15.9ofthe20.1milesofguidewayand13ofthe21stations.
TheCoreSystemsContractorscopeincludesthedeliveryofVehicles,Signaling,Traction
Electrification,Communications,PassengerScreenGates,andafullyfunctioningOperations
ControlCenter.TheCommunicationsSystemandthePassengerScreenGateSystemare
currentlyunderdevelopmentandareontracktomeetthecurrentProjectschedule.The
contractorhascompletedthebasedesigndevelopmentandiswellintomanufacturingand
testingofallothersubsystems.Train#1(fourcarconsist)wasdeliveredtotheROCin
March2016.ThefirsttwocarsofTrain#2arrivedinHonoluluinApril2017,andthe
remainingtwocarsofTrain#2arescheduledtoarriveinMay2018.Dynamictestingonthe
guidewayisexpectedtobegininthefallof2017.
Figure51: ProjectProgressandStatus
5.3 RightofWayUpdate
TheoriginalROWplanundertheFFGAincludedtheidentificationof223totalparcel
acquisitionsand112totalrelocations.Forthewestsidesections,theHARTROWBranch
hasobtainedsiteaccessforall48requiredparcelsandcompletedall30required
relocations.HARTcontinuestomakesteadyprogressinobtainingtherequiredaccessand
completingnecessaryrelocationsfortheAGSandCCGSsegments.
AcrossallsegmentsoftheProject,HART'sROWscopeofworkhasexpandedconsiderably
sinceitsoriginalconceptionintheFFGA.TheProjectwillrequiretheacquisitionof
approximately500easements,including246additionaleasementsforutilityrelocations,
andapproximately30TemporaryConstructionEasements(TCEs).TheHECOutility
relocationandrelatedeasementsareparticularlycomplicatedareasthatarecurrentlyin
work.ConstructionaccessisbeingnegotiatedfortwoparcelswithinAGSandapproximately
70parcelswithinCCGS.PastexperiencehasshowntherecanbestrongresistancetoROW
acquisitions,andProjectstaffwereinstructedtoproceedwitheminentdomainactionson
thoseparcelsconsideredtobeproblematic.
5.4 StrategicActionstoExpediteROWAcquisitions
HARTrecognizestherearesignificantchallengesthatneedtobeaddressedtoensurethat
theprojectcanbedeliveredasplanned.Thefollowingactionsarebeingimplementedto
improveourabilitytodelivertheROWpropertiesinthetimeliestmannerpossible.
Fillvacantpositionsandincreasestaffingtomeetincreasedacquisitionneeds
Useallavailableinformationtoactattheearliestpossibletimeandmaximize
economiesofscalewhereappropriate
Placepriorityonobtainingaccessforconstructionoftemporaryutilitywork
Engagelegalrepresentationforcomplex/difficultacquisitionsearly
Staggering/Phasingofpropertyavailabilityforcontractors
Enforcecontractorresponsibilitiestoresequenceoremploymitigationstrategiesto
avoiddelayclaims
Aggressivemonitoringofacquisitionandrelocationactivityprogress
5.5 SummaryofActionstoCompletion
5.5.1 MajorContractProcurements
TheCCGSDBandthePHGTDBcontractprocurementsarethelastmajorcontractsyettobe
awarded.TheCCGScontractisthecriticalpathfortheoverallProjectandisthelastofthe
majorcontractstobeprocured.ThecurrentscheduleforCCGSisestimatedtobe
65monthslong,asignificantamountoftimefora4.16milesegmentthatisevidenceofits
complexity.UtilityrelocationisasignificantpartoftheCCGSprojectinHonolulu'surban
core,andHARTisproactivelyperformingpreconstructionSUEandgeotechnicalwork.
Thesefinalcontractswillalsobenefitfromlessonslearnedandvalueengineeringdescribed
inSection4.2aboveandupdatestoProjectControls,particularlytherobustProjectMaster
ScheduleandRiskAssessment.
Thesequencingoftheguidewayconstruction,whichisultimatelydecidedbytheCCGS
contractor,willdrivethecriticalpathtocompletion.HARTisdedicatedtoworkingclosely
withthisfuturepartnertomeettheProject'scostandscheduletargets.
5.5.2 HECOCoordination
HECOindicatedaneedinthe2019timeframeforanewdedicated46kVsubstationtofeed
theROCduetorequirementsinHECORule13forlineextensionsandsubstations.A
locationneartheROCisbeingconsidered,andinitialplanningisongoingwithHECOand
LCC.NoothersubstationshavebeenidentifiedbyHECOfortheProject.
HECOhasalsoinformedHARTthatHECOwillnotperformutilityrelocationconstruction
servicesfortheelectricalfacilitieswithintheAirportandCityCentersections,includingthe
DillinghamTemporaryUtilitiessection.HECOhadpreviouslyperformedelectricalutility
relocationconstructionworkforthewesternhalfoftheProjectatHART'srequestinorder
tohelpreduceandmanagecost.However,HECOhasindicatedthatitwillnotbeself
performinganyconstructionworkfortheremainingAGSandCCGScontracts.Accordingto
HECO,thisisaresultofitsresourceshavingbecomestressed,whichwouldaffectitscore
mission.However,HECOwillcontinuetoperformtheelectricaldesign.HARTwillprocure
theutilityrelocationsconstructionservices.HARTwillexplorealternativeandavailable
optionstoensurethatthecurrent2025scheduleisnotaffected.
5.5.3 CastingYard
OnApril19,2017,theFTAprovidedconditionalapprovalofHART'sacquisitionvialicense
agreementoftheprecastconcretemanufacturingyard,identifiedasLot31ofKapolei
BusinessParkWest,PhaseI.
HARTfinalizedcompliancewiththeFTAconditionalapprovalonApril20,2017.
HARTisnowintheprocessofexecutingagreementstoassumethecurrentlicenseand
secureanewlicenseforthecastingyardthroughNovember2022.HARTintendsto
sublicensethecastingyardtotheAGSDBcontractor,Shimmick/Traylor/GraniteJV.
Theshorttermagreementhasbeensignedbyboththecontractorandthepropertyowner
andiswithHARTforfinalexecution.
5.6 DevelopmentofAcceptableProjectCost
5.6.1 Introduction
OneofthemostcriticalcomponentsoftheHARTRecoveryPlanisthedevelopmentofa
realisticcostestimateforthecompletionofthefullProjectscopeassetforthintheFFGA,
referredtohereinastheEstimateatCompletion(EAC).IndevelopingtheEAC,HARThas
embracedFTAguidelinesandproceduresrelatingtoriskassessment,costmitigation,and
estimatesofcapitalcost,aswellascostestimatingmethodologieswellacceptedinthe
constructionindustry.
Inparticular,indevelopingtheEAC,HARTconductedaprocessfortheidentificationand
categorizationofrisks(describedinAppendixC)anddevelopedthePrimaryandSecondary
Mitigations(describedinAppendixB).TheBasisofEstimate(BOE)inAppendixFdescribes
indetailthecapitalcostestimatemethodologyandassumptionsusedtodevelopthe
ProjectEAC.
5.6.2 CostEstimatingMethodology
Forawardedconstructioncontracts,theactualvaluesofthecontractswereusedin
developingtheEAC.ThisincludestheWOFH,KHG,AGS,andMSFDesignBuildcontracts;
theWestO'ahuStationGroup(WOSG),FarringtonHighwayStationGroup(FHSG),and
KamehamehaHighwayStationGroup(KHSG)DesignBidBuildcontracts;andtheCore
SystemsContractor(CSC)DesignBuildOperateMaintain(DBOM)contract.Allbidvalues
wereadjustedandsortedbytheappropriateStandardCostCategory(SCC)forthese
estimates.AnICEandValidationEstimatewerecompletedfortheCCGSprocurement.
AdditionaldatasourcesusedforfactoringtheEACincludedstaffingprojections;change
ordersinnegotiationswithcontractors;meritchangesunderevaluation;knownriskswith
potentialcostorscheduleimpacts;andcontingencytoaccountforunknownsiteconditions,
unresolveddesignorscopeissues,marketfluctuations,regulatoryrequirements,and
scheduleimpacts.
5.6.3 AdequacyofContingency
OneofthelessonslearnedbyHARTfromtheearlierstagesoftheProjectisthecritical
importanceofsufficientprojectcontingencytoaddresschangingmarketconditions,the
costimpactofscheduledelays,andotherprojectriskfactors.TheFTAplacesgreat
importanceonassuringthattheprojectsponsormaintainsadequatecontingencylevelsfor
variousstagesofprojectdevelopment,asdescribedintheFTA'sOversightProcedure40c,
RiskandContingencyReview,1112.CombiningtheFTA'sguidancewiththeRisk
ManagementProgramdescribedinSection3.3.3ofthisRecoveryPlan,thetotal
contingencyis$1.1billion(13%ofEAC).
5.6.4 UpdatedCostEstimate
ThecurrentCapitalCostEstimateis$8.165billion,exclusiveoffinancingcosts,which
includes$1.1billionofallocatedandunallocatedcontingency,allinYearof
Expenditure(YOE)dollars.TheAugust24,2017,cancellationofCCGSprocurement
hasgivenHARTtheopportunitytoexploreoptionstooptimizecost.ProjectControls
isintheprocessofthoroughlyanalyzingthepotentialoftheseopportunities.Asthis
analysisisstillinprocess,thecurrentBasisofEstimateassumesnochangesincethe
previousRecoveryPlansubmission.Asummaryoftheestimatedcostsforthe
Projectisprovidedinthetablebelow:
Table51: UpdatedCostSummary
Estimateat
ContractSummaryStatus Completion
ActiveContracts(includesallocatedcontingency) $4,129,313,000
UnawardedConstruction(includesallocatedcontingency) $1,928,548,000
StaffandConsultants(includesallocatedcontingency) $1,286,632,000
CompletedContracts $546,950,000
UnallocatedContingency $273,641,000
TotalCapitalProject(excludesfinancecosts) $8,165,084,000
HART'sproceduresincludeperiodicupdatestothecostestimatesforallwork,
relyinginpartonthedatafrompreviouslybidwork,tohelpestimatethecostof
remainingwork.Furthermore,theRiskManagementSystemprovidesquarterly
updatestoallProjectrisksinordertomodelthenecessarylevelsofallocated
contingencyforeachcontract.Thisresult,supplementedwiththelevelof
unallocatedcontingencyshownabove,providesHARTwithareasonabledegreeof
confidencethattheProjectwillbedeliveredwithintheEACshowninTable51
above.Atthetimeofeachquarterlyupdate,iftheEACvariesfromthevalueshown
above,thenHARThastheopportunitytoeitherutilizeaportionoftheunallocated
contingency,ortoimplementaggressivecostcontainment/costreductionproposals
beingmonitoredbytheRiskManagerwithinputfromtheProjectteamsinorderto
keeptheProjectonbudget.
5.6.5 RangeofFinanceCosts
TheProjectfinancingcostswillbedeterminedbytheultimatefundingsolution.Financing
costswillvarybasedonwhenadditionalfundingisreceived,thetotalamountofdebt
required,interestrates,andbondmaturity.TheProjectfinancingisdetailedinSection6.
5.7 DevelopmentofAcceptableProjectSchedule
HART'ssuccessinachievingtheupdatedRSDwilldependinlargepartonthecontinueduse
oftheMPISasaforecastingtoolratherthanastatusreportingtool.Whilethisisarecent
changeinhowtheMPIShasbeenused,managementattentionwillbeneededinorderto
maintainthisfocusacrosstheorganization.ProjectControlshasreachedouttothevarious
HARTDivisionDirectorsforinformationtopopulatetheMPISandhowtheiractivitiesrelate
toprocurement,design,and/orconstruction.Diligentupdatingofthisinformationiscrucial
tothesuccessoftheMPISbeingausefultoolformanagingtheoverallProjectactivitiesin
ordertobestmanagetheProjectasawholeratherthanlocalizedoptimizationofeach
contract.
TheMPISincludesactivitiesfromHARTDivisionDirectorsforprocurement,environmental
actions,andsafetyandsecurityaswellasdesign,construction,andcoresystemscontracts.
Therearemajormilestonesamongtheconstructionandsystemscontractsthatprovide
significantpointsofinterface,referredtoasContractorAccessMilestones(CAMs),that
defineaccessandcrosscontractexchangeofdesign,construction,andoperational
information.Considerationwasgiventotheconstructabilityofutilityrelocations,
foundations,columns,andguidewayerectionbasedonperformancemetrics,aswellasthe
physicalcharacteristicsoftheexistingbuiltenvironment.Constructionsequenceswere
developedbasedonareasonableandprudentapproachtoconstructionassuminga
balanceandflowofcrews,crewsizes,andequipmentanddirectionalheadingstooptimize
theschedule.Theselectedcontractor(s)maycomeupwithequalorbetterschemesbased
ontheirpreferredmeansandmethodsandexistingoperationalexperienceaswellasthe
availabilityofequipmentandlabor.AmoredetaileddescriptionofProjectschedule
developmentisfoundinSection3.3.2.
5.8 OperationsandMaintenanceforInterimandFullOpenings
TheProject'sO&MDevelopmentTeamisresponsiblefordevelopingasafe,secure,
convenient,reliable,andcleanservicetothegeneralpublicforthe20.1milerailsystem
fromEastKapoleiStationtoAlaMoanaCenterStation.HARTO&Miscurrentlydeveloping
thepolicies,procedures,andstaffingrequirementstosuccessfullyoperateandmaintainthe
HRTPsystemasdescribedaboveinSection3.DuringtheInterimServiceperiod,HARTO&M
willalsomanagetherailsystem'soperationsandmaintenancecontracts,includingtheCore
SystemsContractor,farecollectionsystem,andescalatorsandelevators.
TheO&MTeamwillbereadytooperateandmaintainthesystemfromEastKapoleiStation
toAlohaStadiumStationforaninterimopeningin2020.TheO&MTeammustmeetthe
samerigorousoperationalreadinessstandardsandsafetyrequirementsfortheinterim
openingasforanylevelofpassengerservice.Manyofthemajorstartupcostswillstill
applytoaninterimpassengerservice.TheFTAwillalsorequireaTransitAssetManagement
PlanandStateofGoodRepairreportingforrevenueservice,whichdoesapplytoaninterim
opening.
Therailsystemwilloperatedailyfrom4a.m.tomidnightandarriveapproximatelyevery
fiveminutesduringpeaktravelhours.TheO&MTeamwilladjustheadwaysandoperating
strategiestoreflectforecastedpassengerdemand.TheO&MTeamwillalsocoordinaterail
scheduleswiththeCitybussystemandmodifyservicetoaccommodatespecialevents.The
O&Msecurityteamwillenforcesystemrulesandordinances,ensuresafetravelforpatrons,
anddeterfareevasion.O&Mcustomerserviceteamswillprovideinformationandhelpto
thegeneralpublic.TheO&MTeamwillalsoprovidefarecollection,evaluaterevenue
generation,andexploreTODopportunitiesaroundthesystem.
6 ProjectFinance
Thisfinancialplansectiondiscussesthefundingsources;capitalcosts;andrisks,
uncertainties,andmitigationstrategiesassociatedwiththe20.1mileand21station
elevatedrailtransitsystemextendingfromEastKapoleiinthewesttotheAlaMoana
Centerintheeast.Itisorganizedinthefollowingmanner:
Summary
OutcomeofStateandCityFundingLegislation
FinancialPlan
FundingSourcesandForecastMethodology
ProjectCapitalPlan
Risks,Uncertainties,andMitigationStrategies
6.1 Summary
OnSeptember5,2017,theGovernoroftheStateofHawaii,DavidY.Ige,signedintolaw
SenateBill4,2017SpecialSession(SB4),whichbecameAct1,2017SpecialSession(Act1),
providingadditionalfundingsourcestotheCityandHARTtocompletea20.1mileand
21stationelevatedrailtransitsystemextendingfromEastKapoleiinthewesttotheAla
MoanaCenterintheeast,knownastheHonoluluRailTransitProject.Act1authorizedan
extensionofthe0.5%GETsurchargefor3yearsfromDecember31,2027,toDecember31,
2030.Furthermore,Act1increasedthestatewideTATby1.0%,anddedicatedthe
revenuesfromthatincreasetothecapitalcostsoftheProject.
Act1requirestheCityCounciltoadoptanordinanceeffectuatingthe3yearextensionof
theGETsurchargepriortoJanuary1,2018.NoCityCouncilactionisrequiredtoeffectuate
theTATincreaseoritsdisbursementtowardthecostsoftheProject.OnSeptember6,2017,
theCityCounciladoptedBill45(2017),CD1,toextendtheGETsurchargetoDecember31,
2030,andthemayorsignedOrdinance1748intolawonSeptember7,2017.
ThesalientfundingfeaturesofAct1aresummarizedasfollows:
AuthorizestheCitytoextendthecurrent0.5%GETsurchargefor3yearsfrom
December31,2027,toDecember31,2030.
ReducestheState'sshareofthegrossproceedsofthe0.5%GETsurchargefrom10%
to1%effectiveSeptember5,2017.
Establisheda1%statewideTATincrease(from9.25%to10.25%)beginning
January1,2018,toDecember31,2030.
ProvidesthatrevenuesderivedfromtheGETsurchargeonOahuandthe1%TAT
increasearetobeusedforHART'scapitalexpenditures,excludingHART'soperating,
administrative,marketing,andmaintenancecosts.
Intotal,Act1isprojectedtoyieldupto$2.509billionofadditionalrevenue.Assumptions
usedtoderivethisamountarediscussedlaterinthisChapter.Table61belowillustrates
theadditionalrevenuesexpectedfromAct1.
Table61: FundingSummary
PriorFunding DollarAmount
Projections Act1 ofChange Percentof
Source (millions) (millions) (millions) Change
ActualGETCollectionsfrom
$1,600 $1,600 $0 0%
September2009toJune2017
ProjectedGETfromJuly2017to
$2,875 $3,162 $287 9.98%
December2027
ProjectedGETfromJanuary2028
$0 $1,111 $1,111 100%
toDecember2030
StatewideTATfromJanuary2018
$0 $1,111 $1,111 100%
toDecember2030
Total $4,475 $6,984 $2,509 56.06%
InadditiontoprovidingadditionalfundingfortheProject,Act1includesanumberofState
oversightprovisions:
BeginningonJanuary1,2018,alloftheGETsurchargeandTATincreaserevenues
willbedepositedintoaStatespecialfundknownastheMassTransitSpecialFund.
TheState'sComptrollermustcertifyHARTinvoicesasanacceptableuseoffunds
pursuanttoAct1beforetheStateDirectorofBudgetandFinancewillreleaseany
GETandTATintheMassTransitSpecialFundtotheCity.
TheState'sOfficeoftheAuditorwillconductandcompleteanauditofHARTby
January2019.Furthermore,theauditorisrequiredtoperformanannualreview
beginningimmediatelyandendingonDecember2031.
ThePresidentoftheStateSenateandtheHouseSpeakeraretoeachappointtwo
nonvotingmemberstotheHARTBoardofDirectors.Theimplementationofthis
provisionisunderdiscussionbytheState'sandtheCity'sattorneys.
6.2 OutcomeofStateandCityFundingLegislation
6.2.1 StateLegislatureandGovernoroftheStateofHawaii
Asindicatedabove,followingStatelegislativeactioninaspecialsession,GovernorIge
signedSB4intolawonSeptember5,2017,whichbecameAct1.
Act1providesforrevenuesourcestofundtheconstructionoftheProject.Morespecifically,
theact:
AuthorizestheCity,whichpreviouslyadoptedanordinancetoestablisha0.5%
surchargeonthestateGET,toextendthesurchargeforthreeadditionalyears,from
December31,2027,toDecember31,2030.
Decreasesfrom10%to1%theGETsurchargegrossproceedsretainedbytheState
effectiveSeptember5,2017.
IncreasestheTATstatewideby1%,from9.25%to10.25%,beginningJanuary1,
2018,throughDecember31,2030,fortheProject.
EstablishestheMassTransitSpecialFundandspecifiesthattherevenuesfromthe
GETsurchargeandTATincreasebedepositedintothisspecialfundforthecapital
costsoftheProject.
RequirestheStateComptrollertoverifyandcertifyinvoicessubmittedforthe
Project.
AllowstheStateDirectorofFinancetodisbursemoneysfromtheMassTransit
SpecialFundtotheCity'sDirectorofBudgetandFiscalServicesonamonthlybasis
upontheStateComptroller'scertificationofHART'sinvoices.
Providesthat,afterSeptember5,2017,GETandTATrevenuesallocatedfromthe
MassTransitSpecialFundcannotbeusedforthefollowing:
Operationormaintenancecostsofamasstransitproject.
HART'sadministrative,operating,marketing,ormaintenancecosts.
Providesthat,ifacourtmakesamonetaryawardtoaCountyduetotheState's
violationofanystatelaworconstitutionalprovisionrelatingtotheState'sdeduction
andwithholdingofcountysurchargeonstatetaxrevenues,thenanamountequalto
themonetaryawardshallbedeductedandwithheldfromthetaxrevenues
depositedintotheMassTransitSpecialFundandshallbecreditedasageneralfund
realizationoftheState.
RequirestheStateAuditortoconductandcompleteanauditbeforeJanuary2019
andtoconductannualreviewsofHART.
ProvidesfortheSenatePresidentandtheHouseSpeakertoeachappointtwonon
voting,exofficiomemberstotheBoardofDirectorsofHART.
6.2.2 HonoluluCityCouncilandMayoroftheCityandCountyofHonolulu
FollowingfinalpassageofBill45(2017),CD1,RelatingtotheTransportationSurcharge,by
theCityCouncil,HonoluluMayorKirkCaldwellsignedintolawOrdinanceNo.1748.
Ordinance1748extendsthecountysurchargefor3yearsfrom2027to2030.Additionally,
Ordinance1748codifiestheprohibitionsontheuseoftheGETsurchargefundsestablished
inAct1describedabove.
6.3 FinancialPlan
The"Baseline"financialplanpresentedinFigure61waspreparedusingthefollowing
assumptions:
GETrevenueprojectionsfromJuly1,2017,andTATrevenueprojectionsfrom
January1,2018,arebasedontheSeptember2017forecastoftheStateofHawaii's
CouncilonRevenues(RevenueCouncil).Assumptionsusedarediscussedunderthe
FundingSourcesandForecastMethodologysection(Section6.4)below.
AnnualadministrativeandoperatingexpendituresofHARTarefundedbytheCity.
AcombinationofGeneralObligation(GO)bondsandshorttermborrowinginthe
formofTaxExemptCommercialPaper(TECP)willbeusedtopartiallyfinancethe
Project.ProjectedinterestratesusedforGObondsare4%forfixedrateand3%for
variableratebondsandTECP.
Capitalexpendituresprojectionsarebasedoncontractschedulesandmilestones.
Totalprojectcapitalcostof$8.165billion,exclusiveoffinancecharges,withfull
RevenueServiceDate(RSD)onDecember31,2025.
($ in millions) Fiscal Years
Total Actuals to Actual

2016 2017 Est. 2018 Est. 2019 Est 2020 Est. 2021 Est. 2022 Est. 2023 Est. 2024 Est. 2025 Est. 2026 Est. 2027 Est. 2028 Est. 2029 Est. 2030 Est. 2031 Est. 2032
Beginning Cash Balance $298 $298 $95 $23 $25 $24 $24 $24 $25 $25 $25 $22 $14 $42 $66 $46 $33 $25
Project Funding Sources:

G.E.T. Surcharge $5,873 $1,320 $226 $248 $262 $271 $281 $291 $301 $311 $320 $330 $341 $351 $362 $373 $285 $0
TATRevenues $1,111 - - 29 63 67 71 74 78 82 86 91 95 100 105 111 58 -
Federal Grant $1,550 569 216 21 229 227 288 - - - - - - - - - - -
City Subsidy - HART Admin $160 - - 20 24 25 26 21 17 12 10 5 1 - - - - -
All Other $7 6 1 0 - - - - - - - - - - - - - -
Total Revenue $8,702 $1,895 $443 $318 $578 $590 $666 $386 $396 $406 $417 $426 $437 $451 $467 $484 $343 $0
Debt Proceeds
TECP (net) Max $350 m $1,864 $0 $130 $182 $302 $250 $250 $249 $251 $250 $0 - - - - - - -
Variable Bonds 350 - - 350 - - - - - - - - - - - - - -
Fixed Rate Bonds Net of 2,419 - - - 166 256 454 708 357 111 367 - - - - - - -
HonoluluRailTransitProject
Issuance Costs
Total Debt Proceeds $4,633 $0 $130 $532 $468 $506 $704 $957 $608 $361 $367 $0 $0 $0 $0 $0 $0 $0
Additional Funds 54 - - - - - - - - - - 5 9 10 10 10 10 -
Total Project Sources $13,389 $1,895 $573 $850 $1,046 $1,095 $1,370 $1,343 $1,004 $767 $784 $431 $446 $461 $477 $494 $353 $0
Project Uses:
Construction $6,134 $1,350 $517 $522 $578 $624 $879 $781 $423 $203 $148 $106 $3 - - - - -
Figure61: BaselineFinancialPlan
Design 220 155 10 23 19 4 2 2 2 2 1 - - - - - - -

ROW / Utilities 726 172 19 113 149 111 75 36 36 15 - - - - - - - -
Program-Wide 449 253 23 21 24 24 24 21 18 17 14 8 2 - - - - -
HART Administration 274 88 22 23 24 25 26 21 17 12 10 5 1 - - - - -
Planning 88 79 2 3 2 1 0 0 - - - - - - - - - -
Project Costs $7,891 $2,098 $593 $706 $796 $788 $1,007 $861 $497 $249 $174 $119 $6 $0 $0 $0 $0 $0
Unallocated Contingency 274 - - - 0 16 42 63 63 55 30 4 - - - - -
Total Project Costs $8,165 $2,098 $593 $706 $796 $788 $1,023 $903 $560 $312 $229 $148 $10 $0 $0 $0 $0 $0
Debt Service:
Principal:
VariablePrincipal $350 $0 $0 $0 $0 $0 $0 $42 $50 $50 $50 $50 $50 $50 $8 $0 $0 $0
Fixed Principal 2,428 - - - - - - - 13 39 94 196 277 321 437 475 494 83
CP Retirement 1,864 - 50 100 214 250 250 250 250 250 250 - - - - - - -
Subtotal Principal $4,643 $0 $50 $100 $214 $250 $250 $292 $313 $339 $394 $246 $327 $371 $445 $475 $494 $83
Interest:
VariableInterest $79 $0 $0 $9 $11 $11 $11 $10 $9 $7 $6 $4 $3 $1 $0 $0 $0 $0
Fixed Interest 736 - - 3 10 24 45 67 78 87 92 87 78 66 51 33 13 2
CPInterest 33 - 2 1 5 5 4 3 5 7 2 - - - - - - -
Subtotal Interest $848 $0 $2 $12 $25 $39 $60 $80 $92 $100 $99 $91 $80 $67 $51 $33 $13 $2
Total Debt Service $5,491 $0 $52 $112 $240 $289 $310 $372 $405 $440 $493 $338 $407 $438 $496 $507 $507 $84
City Debt Reserve:

DeposittoCityDebtReserve $283 $0 $0 $30 $11 $19 $37 $67 $40 $15 $65 $0 $0 $0 $0 $0 $0 $0
ReleaseCityDebtReserve (283) - - - - - - - - - - (47) - - - - (147) (90)
City Debt Reserve $0 $0 $0 $30 $11 $19 $37 $67 $40 $15 $65 ($47) $0 $0 $0 $0 ($147) ($90)
Total Project Uses $13,656 $2,098 $645 $848 $1,047 $1,096 $1,369 $1,342 $1,005 $767 $787 $439 $417 $438 $496 $507 $360 ($5)
Net Current Change ($267) ($203) ($72) $2 ($1) ($0) $0 $1 ($0) ($0) ($3) ($8) $29 $23 ($19) ($13) ($8) $5
Ending Cash Balance $31 $95 $23 $25 $24 $24 $24 $25 $25 $25 $22 $14 $42 $66 $46 $33 $25 $31

Page69of213
Table62belowsummarizesHART'sbaselinefinancialplan:
Table62: BaselineFinancialPlan
Funding
Source (millions)
BeginningCashBalance $298
GET $5,873
TAT $1,111
FederalGrant $1,550
CitySubsidy $160
AllOther($4millionfromtheAmericanRecoveryand $7
ReinvestmentAct;therestfrominterestincomeandrent)
TotalFundingSources $9,000
AdditionalFunds $54
TotalSources $9,054
CapitalExpendituresexclusiveofFinancing $8,165
FinancingCosts $858
TotalCapitalExpendituresincludingFinancingCosts $9,023
EndingCashBalance $31
6.4 FundingSourcesandForecastMethodology
6.4.1 OahuGETSurchargeandStatewideTAT
ThelocalfundingsourcesfortheProjectareasfollow:
Adedicated0.5%GETsurcharge,withtheCityandHARTreceiving99%ofthegross
GETproceedseffectiveSeptember5,2017.The99%isanincreasefromthe90%of
grossproceedsfromJuly1,2007,toSeptember4,2017.
Adedicated1.0%oftheStatewideTAT,withtheCityandHARTreceiving100%of
thegrossproceedsbeginningJanuary1,2018.
BoththeGETandTATexpireonDecember31,2030.Bothfundingsourcesaredeposited
intotheMassTransitSpecialFundquarterlysubjecttotheoversightprovisionsdescribedin
theSections6.1and6.2.1above.However,theState'sDirectorofBudgetandFinancehas
thediscretiontodisbursethesefundsmonthly,subjecttotheavailabilityoffundsinthe
MassTransitSpecialFund.
AsshowninTable61intheSummarysectionabove,thesefundingsourcesareexpectedto
bringin$6.984billiontotheProjectthroughDecember31,2030,withapproximately
$2.509billioninadditionalfundinggeneratedfromtheprovisionsofAct1.
6.4.2 GETSurchargeandTATForecastMethodology
6.4.2.1 CurrentMethod
Thegrowthratesusedforthisfinancialplanareforwardlooking(upto7years)andbased
ontheStateRevenueCouncil'slatestforecastofstategeneralfundtaxrevenueandgrowth
asdetailedbytheStateDepartmentofTaxation(September2017,seeFigure62).The
RevenueCouncilisaconstitutionallymandatedbodyconsistingofsevenmembers
appointedbytheGovernor,theSenatePresident,andtheHouseSpeaker.Itsrevenue
estimatesareusedbytheGovernorandtheStateLegislaturetopreparebiannualbudgets
andappropriations.DeviationsfromtheRevenueCouncil'sestimatesmustbejustified.
TheRevenueCouncilmeetsfourtimeseachyeartoreview,establish,and/orrevisestate
taxrevenueestimates.Figure62showstheRevenueCouncil'sEstimatesofGeneralFund
TaxRevenuesforecastasdetailedbytheStateDepartmentofTaxation.Table63below
summarizesthegrowthratesthroughyear2030.
Figure62: RevenueCouncilEstimatedGeneralFundTaxRevenues
Table63: RevenueCouncilGrowthRates
GET
FiscalYear Surcharge TAT
2018 3.90% 8.46%
2019 3.52% 7.08%
2020 3.52% 6.22%
2021 3.55% 5.81%
2022 3.48% 5.45%
2023 3.62% 5.19%
20242030 3.09% 5.04%
HARTusedtheRevenueCouncil'sgrowthratefor2024toestimatethegrowthratesfrom
2025to2030.TheRevenueCouncil'sforwardlookingGETsurchargeandTATgrowthrates
areconsistentwiththecompoundedgrowthrateasdiscussedbelow.
6.4.2.2 PriorMethodGETSurcharge
TheJune2012FinancialPlanassumedthatGETgrowthwouldbeconsistentwiththelong
termGETCAGRof5.04%fromFiscalYear(FY)1981toFY2010.
Generally,theadvantageofutilizingalongtermhistoricalgrowthaveragetoforecast
revenuesisthatitspansseveralbusinesscycles,therebynormalizingextremehighand
lowgrowthyears.However,theperiodusedinthe2012FinancialPlanincludedsustained
highinflationaryyearsinthe1980sandearly1990s.Figure63belowhighlightsthechange
intheCAGRfrom19811991comparedto19922017.TheCAGRexperiencedsince1992
(3.7%)islessthanhalfthegrowthrateexperiencedoverthepreceding10yearperiod
(8.5%).
Figure63: GETComparison,19811991vs.19922017
GETCompoundedAnnualGrowthRates
10.00%
8.5%
8.00%
6.00%
3.7%
4.00%
2.00%
0.00%
CAGR19811991 CAGR19922017

GiventhewidevarianceintheCAGR,the5.04%growthrateassumedatthetimeofthe
2012FinancialPlanhasbeenchangedanumberoftimessincethen,tolowernumbers
reflectingactualgrowthratesoftheGETsurchargecollections,asshowninTable64below.
Table64: ProjectForecastedGrowthRates
GrowthRate
MonthandYear Forecast
July1,2012 5.04%
March31,2015 4.75%
September30,2015 4.00%
March1,2016 4.30%
6.4.2.3 TransientAccommodationTax
TheprojectedTATgrowthrateisbasedonthemostrecentRevenueCouncil'sStateGeneral
FundTaxRevenueforecast(September2017,seeFigure62).TheRevenueCouncil'sgrowth
ratesareconsistentwiththehistoricalCAGRwhenadjustedforincreasesintheTATtaxrate.
AsshowninFigure64below,theCAGRhasbeenrelativelyconsistentovervarioustime
intervals.TheCAGRbasedontheRevenueCouncil'sforecastis5.4%.
Figure64: StatewideTATCompoundedGrowthRate

6.4.2.4 ConclusiononRevenuesForecastMethodology
TheRevenueCouncil'sforecastisanobjectivemethodforprojectingGETsurchargeandTAT
revenues,embodiedintheStateConstitution.TheRevenueCouncil'sforecastprovidesfor
timelyupdatestochangesintheeconomyandisconsistentcomparedtotheGETandTAT
CAGRsince1990aswellasvariancesinmorerecentCAGRperiods.
6.4.3 FederalFunding
TheCityreceivedatotalof$806millionofthe$1.550billionNewStartsfundingfromthe
FTAthroughJuly2017.Theremaining$744millionisawaitingFTAaward.Thisupdated
financialplanestimatesthenextincrementalawardofapproximately$229millionwillbe
releasedaroundJuly1,2018,withtheremainingbalancetobedisbursedthrough2021.
NoadditionalFTAgrantfundingisconsideredinthefinancialplan.
6.4.4 CitySubsidyHARTAdministration
AsdiscussedintheSummarysection,Act1prohibitstheuseofrevenuesderivedfromState
taxrevenues(GETandTAT)forHARTannualadministrativeandoperatingexpenditures.
ThisupdatedFinancialPlanassumesthattheserestrictedexpendituresthatmaynotbe
paidfromGETorTATrevenuescorrespondtoHART'sannualoperatingbudgetreflectedin
Figure61asHARTAdministrationunderProjectuses.Accordingly,thisupdatedFinancial
PlanisbaseduponfundingfromtheCityintheamountofHART'sprojectedannual
operatingbudgetsforFY2019toFY2027,aswellaspartialfundingforFY2018.Additionally,
theCityrecognizesthatadditionalfunds,beyondtheamountsprojectedforHART'sannual
operatingbudgets,mayberequiredtocompletetheProject.Toclarify,administrativeand
operatingexpendituresofHARTarenotthesameasOperationandMaintenance(O&M)
expendituresduringrevenueoperation.
BaseduponHART'scurrentandprojectedannualoperatingbudgets,theestimatedamount
ofCityfundsrequiredforadministrativeandoperatingexpensesfromtheeffectivedateof
Act1(September5,2017)toDecember31,2030,totals$160million.Table65below
showsHART'sestimatedadministrativeandoperatingexpendituresbyyear,whichmay
requireannualCityCouncilappropriationthroughtheannualExecutiveOperatingBudget,
byfiscalyear.Asaresult,thisupdatedFinancialPlanrequiresCityCouncilapproval.HART
willseektointroduceaCityCouncilresolutiontoapprovethisupdatedFinancialPlanfor
CityCouncilactioninOctober2017.
Table65: EstimatedCitySubsidyHARTAdministration
Amount
FiscalYear (millions)
2018 $20
2019 $24
2020 $25
2021 $26
2022 $21
2023 $17
2024 $12
2025 $10
2026 $5
2027 $1
6.5 ProjectCapitalPlan
TheBaselineProjectcostsareshownbelowinTable66.
Table66: BaselineProjectCosts
Amount
Description (millions)
CapitalCost $8,165
FinancingandIssuancesCosts $858
Total $9,023
6.5.1 CapitalCost
Thebaselineprojectcostsbelowincludeexecutedcontractstotalingapproximately
$4.4billion(53.89%oftotalprojectcostbelow)withapproximately$2.8billionpaidtodate.
Twomajorconstructioncontractsremaintobeprocured:CCGSandPHGT.
Table67: BaselineProjectCosts
Estimateat
CostSummary Completion
Construction(SCC10toSSC50) $5,238,076,258
ROW(SCC60) 263,522,643
Vehicles(SCC70) 211,661,870
ProfessionalServices(SCC80) 2,178,152,556
UnallocatedContingency 273,641,000
TotalCapitalProject(excludesfinancecosts) $8,165,084,000
OnAugust24,2017,theCCGSsolicitationwascanceledduetodevelopmentsaffectingthe
qualificationsoftwoprioritylistedofferors,desiredmodificationstothescopeofwork,and
theintenttofurtherenhancecompetition.Theimpactofthiscancellationtocapitalcost
andprojectscheduleisdiscussedbelowinSection6.6,Risks,Uncertainties,andMitigation
Strategies.
6.5.2 CapitalCostFinancing
ThefinancingplanfortheProjectwasdevelopedto(1)preservetheCity'sfinancial
condition,(2)minimizefinancecharges,and(3)repaydebtservicesolelyfromProject
revenuesbyFY2030.
Intheyearsinwhichcapitalexpendituresaregreaterthanthefundingavailable,a
combinationofGObonds(toberepaidbyProjectrevenuesandotherfundingsources)and
shorttermborrowing(uptoa270dayrevolvingbasis)intheformofTECPwillbeused.
HARTandtheCityenteredintoaMemorandumofUnderstandingonMay7,2015,which
wasamendedandrestatedonJuly26,2017(asamendedandrestated,the"MOU"),The
MOUprovides,amongotherthings,thatHARTisrequiredtodepositintotheCity'sgeneral
fundadebtreserveequaltothelesserof10%oftheparvalueoftheoutstandingbond
amountor50%ofthemaximumannualdebtserviceonalloutstandingbonds.Thisfinancial
plananticipatesthereleaseofthedebtreservetopartiallyfunddebtservicein2026,2031,
and2032.OnSeptember6,2017,theCitysuccessfullysold$350millionofvariablerateGO
bondstopartiallymeetHART'sFY2018cashneeds.
Thefinancialplanassumesinterestratesof4.00%forfixedrateGObondsand3.00%for
variablerateGObonds.TheratesusedarebasedontheCity'scurrentAA+rating.The
interestrateusedonTECPisat3.00%.ThevariableratebondssoldonSeptember6,2017,
describedabove,carryaninitialvariableinterestrateofSecuritiesIndustryandFinancial
MarketsAssociation(SIFMA)plus30to32basispoints(approximately1.1%)adjusted
weekly.
Issuancecostsofdebtareestimatedat0.40%ofgrossGObondproceedsandtheTECPline
ofcredit.
TheCity'sfinancingrequirementsarepresentedinFigure61,underDebtFinancing
Summary.Insummary,GObondproceedsamountto$2.769billion,withTECPrevolving
borrowingsat$1.864billion(maximumlimitof$350millionoutstanding).Alldebtswillbe
repaidbyFY2032.
6.6 Risks,Uncertainties,andMitigationStrategies
Thesectionsabovefocusondiscussionssurroundingthebaselinefinancialplanand
assumptions.Thisfollowingdiscussionemphasizestherisksanduncertainties,including
mitigationstrategies,onkeyassumptions.
6.6.1 CapitalPlan
6.6.1.1 ProjectCosts
ThissectiondiscussespotentialrisksassociatedwiththeCCGS,utilityinstallationand
relocations,andROWacquisitionandrelocations.
CCGS:Asdiscussedabove,afteranextendedsuspension,onAugust24,2017,the
CCGSsolicitationwascanceledduetovariousdevelopmentswhichmadeitprudent
toresolicittheproject.Theimpactofthiscancellationoncapitalcostandproject
scheduleisunderevaluation.Thereisapotentialriskofconstructionescalationand
relatedadditionalsoftcostsifmitigationstrategiesdonotmaterialize.HARTisusing
thisopportunitytoexploreothercontractdeliveryoptionswiththeobjectiveof
reducingcostsandshorteningtheProjectschedule.HARTisalsoreviewingan
advancedutilitiescontracttoclearthepathforthefollowonCCGScontract.This
advancedpackagecouldmitigatescheduledelaysandreduceunforeseenrisksinthe
CCGScontract.However,thereisalsoariskthataseparateutilitiescontractpackage
couldincreasethe"soft"costsduetosomeadditionalconstructionmanagement
andadministrationcosts.
Additionally,aviableoptionmaybeaPublicPrivatePartnership(P3).Inrecent
years,P3shavebeenemployedinanumberofprojectsaroundthecountrywith
positiveresults(savingsbetween15%to25%asdocumentedintheMarch7,2017,
uluponoreport).Coincidentally,theFTArecentlyproposednewrulesencouraging
privateinvestmentsinpublictransportationprojects.TheCityandHARThaveheld
preliminarydiscussionswiththeprivatesector.Inadditiontothepotentialsavings,
otherbenefitscouldbeinnovationbroughttotheProject;longtermrisktransferred
totheprivatesector;increasedcostandschedulecertainty;increasedpublic
confidenceintheProject;andconstructionacceleration.
HARTisintheprocessofbringingonboardaP3Advisortoperformanoverall
viabilityassessment,fortheuseoftheP3deliveryapproachtotheCCGSandthe
PHGTprojects,aswellastohelpdevelopthemostoptimalmodelofP3thatcould
beused.HART,inconjunctionwiththeP3Advisor,willperformaMarketSounding
toassesstheinterestoftheprivatesectorinparticipatingintheseprojects.
Utilities:Utilityinstallations/relocationsrepresentanothersignificantcost
componentastheProjectmovesintothemorecongestedCityCentersegment.The
Projecthasmajorimpactsonmultipleutilities,withelectricalinfrastructureowned
byHECOhavingthegreatestimpactoncostandschedule.Utilityrelocationsalong
DillinghamBoulevardareonthecriticalpathandwillrequireindepthutilitydesign
worktoprovidefortheneedsofthesystemandaddressHECOelectricalclearance
issues.Tomitigatetherisk,HARTisproactivelyperformingpreconstruction
subsurfaceutilityengineeringandgeotechnicalwork.HARTisalsoadvancingthe
utilityrelocationpackagetoafullysignedandsealeddocumentforbids.Thisaction
willminimizecostandschedulerisksassignedtothisproject.
ROW:HARTacknowledgesthattheHonolulurealestatemarketisrobust,which
increasesHART'sfinancialandlegalrisksregardingROWacquisitionsand
relocations.Theseriskshavenotyetbeenfullycapturedinexistingriskassessment
models.Manyoftheserisksrelatetothewiderangeofpossiblejuryverdictswith
regardtopropertyvaluationsineminentdomaintrials.However,giventhe
sometimesunpredictableanduncontrollableresultsofjuryverdictsineminent
domaintrials,HARTbelievesitmostprudenttodisclosethepotentialforriskin
excessofbudgetedamountsintheupdatedfinancialplan.
HARThasdeterminedthatafullreassessmentofitstotalallocatedandunallocated
risksfortheentireProject,inclusiveofROWrisks,needstobeperformedatthis
timeandhaskickedoffaseriesofworkshopstothisend.Byfullyassessingboth
risksandopportunities,byandrecognizingthatasubstantialportionoftheworkhas
alreadybeencompleted,HARTisconfidentthatitscurrentcontingencybudgetwill
beadequatetocoverremainingrisksontheProject.
Insummary,HARThasarobustriskmanagementprogramandiscommittedtoenacting
costcontainmentmeasuresasaprimarytooltomaintaintheProject'scapitalcostand
schedulewithintheestablishedbudget.
Ifneeded,HARTalsohasanumberofstrategiestomitigatethesedownsiderisks,including:
AdditionaldebtcapacityavailabletotheCitythroughtheissuanceofGObonddebt.
UtilizetheexistingTECPbondprogramforshorttermfinancingneeds.
ReducingHART'sexpensesandProjectcosts(forexample,throughprivatepublic
partnerships).
ExtendinglocalrevenuesourcessuchasCitysubsidies,whichwillrequireCity
AdministrationandCityCouncilapproval.
AdditionalStatefundingsources,suchasadditionalGETsurchargeandTATrevenues,are
anotherpossibleadditionalsourceoffunds,buttheywillrequirefurtherStatelegislative
enactments.
6.6.1.2 InterestRatesandMunicipalMarket
ThereareinherentrisksassociatedwithinterestratesandaccesstoMunicipalMarketwith
capitalprojectsrequiringfinancing.Interestratevolatilityasaresultofmonetarypolicies,
geopoliticalevents,economicactivities,etc.,canimpactProjectcost.Inarisingrate
environment,additionalrevenuesareusedtopayfinancingcosts.Asaresult,borrowings
willincreasetoreplacetherevenuereservedtopayforcapitalexpenditures.
Tomitigateinterestraterisk,thefinancialplanusesanaverage4%rateforfixedratedebt
and3%forvariableratedebt.Theaverageratesusedareapproximately1%to2%higher
thanthecurrentmarketrate.
6.6.2 RevenueandFundingRisks
6.6.2.1 GETSurchargeandTATRevenues
ThebaselinefinancialplanutilizesthemostcurrentforecastbytheStateRevenueCouncil.
However,actualcollectionsmaycomeinlowerthantheforecastsdependingon
(1)anumberofunderlyingeconomicfactorsoutsideoftheProject'scontrol,and
(2)theDepartmentofTaxation'sGETtaxsurchargeprocessingfluctuations.Temporary
revenueinstabilitycanbecoveredbyTECP.Prolongeddownturnsinactualrevenue
collectionsmayrequirelongtermsolutionsasdescribedabove.
6.6.2.2 FederalGrantRevenues
TheupdatedbaselinefinancialplanassumesauthorizationbytheFTAtodrawdownonthe
remaining$743millioncommencinginJuly2018.Shouldtheauthorizationoccurlaterthan
July2018,additionaldebtmayneedtobeissuedtobalanceProjectcosts.Futuredebt
requirementswouldbereducedoncetheauthorizationisgrantedanddrawdownsresume.
Asanexample,anauthorizationanddisbursementof$100millionbyDecember2017
wouldresultinupto$16millionininterestsavings.
7 OperatingPlan
ThisOperatingPlansectiondiscussestheintegrationstrategiesforbusandrailoperations
andserviceduringtheinterimrevenueserviceopeningscheduledforDecember2020and
thefullrevenueserviceopeningscheduledfor2025.Itisorganizedinthefollowingmanner:
Introduction
BusOperationsandPlanningforRailService
OperatingPlanassubmittedtoFTAonDecember1,2016
7.1 Introduction
DTS,incollaborationwithHART,isactivelyworkingonanintegratedtransportationplanin
preparationforinterimrevenueservicescheduledforDecember2020andfullrevenue
servicescheduledforDecember2025.
AsofJuly1,2017,CharterAmendment4revisedtheCityChartertotransferoperationsand
maintenanceresponsibilityforrailfromHARTtoDTStoleverageoperationsefficiencies
withinthemultimodalrail,bus,andparatransitsystemundertheleadershipofasingle
entity.Furthermore,CharterAmendment4establishedaFareCommissiontoannually
reviewbus,paratransit,andrailfares.TheFareCommissionissettoholditsfirstmeetingin
October2017.Inanticipationofthiseffectivedate,operationsandleadershipteamsfrom
DTSandHARThaveconvenedregularmeetingstoestablisharoadmapandpathsto
integration,transfer,andestablishmentofanefficientoperationsandmaintenance
structurefortheevolvingrailproject.Thecoordinationwillresultinadetailed
organizationalchartwhichwillclearlydelineateroles,responsibilities,andfiscalimpactsfor
futurefundingofpositions,somewhichmaytransferfromHARTtoDTSatappropriate
timespendingrailsegmentcompletionandopening.
Thisdocumentcontemplatesthecompletetransferofoperationsandmaintenance
responsibilitiesfromHARTtoDTStocoincidewithplannedfullrevenueservicerailopening
scheduledfor2025.Therefore,interimoperationsmilestonespertainingtobusand
paratransitincludinginitialinterimopeningbetweentheEastKapoleiandAlohaStadium
Stations,thepotentialextensionoftheinterimsegmenttoMiddleStreetStation,andfull
revenueserviceofthecomplete20.1mile,21stationalignmentwillbedetailedinthe
narrativebelow.
7.2 BusOperationsandPlanningforRailService
Thissectiondetailstheplanningandimplementationstrategiestofullyintegratebus
(TheBus)andparatransit(TheHandiVan)withrailasconstructedsegmentsareopenedand
becomeoperational.
Anyproposedchangestoexistingservicewillinvolveapublicreviewprocess.
7.2.1 InterimOpening1EastKapoleiStationtoAlohaStadiumStation
TheplannedinterimopeningtorevenueserviceinDecember2020betweenEastKapolei
andAlohaStadiumStations(atotalofninestations)representsapproximatelyhalfofthe
20.1milefullrailalignment.ItisashorttermopportunitytoimprovemobilitywithinWest
andCentralOahu;however,sinceitdoesnotyetentertheurbanHonoluluboundary,
plannedservicechangesforthebuswillbelimitedtoreconfigurationsofexistinglocal
servicesandneighborhoodcirculatorstoincorporatetheninerailstations.Regionalexpress
routesandtrunkroutesprovidingservicebetweenWestandCentralOahuwillmostly
remainintactuntilapproachingfullrevenueservicewhenrailentersurbanHonolulu.
Successfuloperationofthissegmentwillenhancethepublicimageandthevalueofrail
transittotheislandeconomyandmaygainsupportfortheeast(UniversityofHawaiiat
Moana)andwest(WestKapolei)extensionsoftherailalignmentasenvisionedintheEIS.
7.2.1.1 EastKapoleiStation
CurrenthubandspokebusnetworksinEwaandKapoleiwillberealignedtoprovideservice
tothisstationaswellastheneighboringUHWestOahuStation.A900parkingspacepark
andridefacilityisplannedaspartofthestationsite.
Existingtrunk,regionalrapidservice,andpeakhourexpresseswillcontinuetooperate.
CommunitycirculatorrouteswillconnectthisstationtotheneighborhoodsofMakakilo,
VillagesofKapolei,KapoleiHawaiianHomesteads,Kalaeloa,EwaVillages,EwaGentry,
OceanPointe,Hoakalei,andEwaBeach.
Moderateserviceincreasesareplannedforrealignmentofthecurrentroutenetworkand
increasesinspansofservice.DTS,incoordinationwithHART,iscurrentlyplanningand
designingrailstationaccesspedestriancrossinginfrastructuretoconnectthisstationto
publicpropertiesacrossthemajorhighwayspeedstateroadway.
7.2.1.2 UHWestOahuStation
CurrenthubandspokebusnetworksinKapoleiwillberealignedtoprovideservicetothis
stationaswellastheneighboringEastKapoleiStation.A1,000parkingspaceparkandride
lotisplannedaspartofthestationsite.
CommunitycirculatorrouteswillconnectthisstationtotheneighborhoodsofMakakilo,
VillagesofKapolei,KapoleiHawaiianHomesteads,Kalaeloa,andHoopili.
Moderateserviceincreasesareplannedforrealignmentofthecurrentroutenetworkand
increasesinspansofservice.
7.2.1.3 HoopiliStation
HoopiliStationwillbeconstructedbeforeitssurroundingTODprincipledneighborhood,
whichisexpectedtodevelopconcurrentlyaroundthestationthrough2030.Aplanned
temporaryparkandridewilloffercommuterstheoptiontouserailasanalternativeto
usingtheparallelH1Freeway.
Noadditionalserviceisplannedfortheinterimopening,althoughexistingtrunkrouteswill
beabletoaccommodatethenewneighborhooduntilmoredensityisimminent.
7.2.1.4 WestLochStation
CurrenthubandspokebusnetworksinWaipahualreadysupportthisstationlocation.
ExistingcommunitycirculatorrouteswillconnectthisstationtotheneighborhoodsofRoyal
Kunia,VillagePark,andWestLochEstates.
Moderateserviceincreasesareplannedforincreasedfrequencyonexistingroutesand
increasesinspansofservice.
7.2.1.5 WaipahuTransitCenterStation
CurrenthubandspokebusnetworksinWaipahualreadysupportthisstationlocationvia
anexistingmajortransitcenterandtransferpoint.Existingtrunk,regionalrapidservice,and
peakhourexpresseswillcontinuetooperate.Existingcommunitycirculatorrouteswill
connectthisstationtotheneighborhoodsofRoyalKunia,VillagePark,RobinsonHeights,
Waipahu,Waikele,Seaview,Crestview,andWaipio.NewservicewillextendtothenewKoa
Ridgeneighborhood.
Moderateserviceincreasesareplannedforextendedservice,increasedfrequencyon
existingroutes,andincreasesinspansofservice.
7.2.1.6 LeewardCommunityCollegeStation
AsingleexistingcommunitycirculatorwillconnectthisstationtothePearlCityandPearl
CityPeninsulaneighborhoods.
Noincreasesinserviceorservicespanareplannedforthisphase.
7.2.1.7 PearlHighlandsStation
Existingtrunkandregionalrapidserviceswillcontinuetooperateandservethisstation.
A1,600parkingspacegaragewithdedicatedregionalfreewayinterfacesandamajorbus
transitcenterisplannedaspartofthestationsitebutwillnotbeavailableforinterim
opening.
Noincreasesinbusserviceareplannedforthisstationforthisphase.DTS,incoordination
withHART,iscurrentlyplanninganddesigningrailstationaccesspedestriancrossing
infrastructuretoconnectthisstationtopublicandprivatepropertiesacrosstheadjacent
majorStateownedKamehamehaHighway.
7.2.1.8 PearlridgeStation
Planningisunderwayfortheconstructionofanadjacentbustransitcenter.Currentpeak
hourcommunitycirculatorrouteswillberealignedandservicespansextendedtosupport
thisstation.
Moderateserviceincreasesareplannedforextendedservice,increasedfrequencyon
existingroutes,andnotedincreasesinspansofservice.
7.2.1.9 AlohaStadiumStation
A600parkingspaceparkandridelotandamajorbustransitcenterwillbeconstructedas
partofthissite.Currentpeakhourcommunitycirculatorrouteswillberealignedand
servicespansextendedtosupportthisstation.
Sincethisstationcurrentlyservesastheinterimeastendterminusoftherailalignmentas
constructioncommenceseastwardtothefinalplannedterminusatAlaMoanaCenter
Station,majorserviceincreasesareplannedforextendedservice,increasedfrequencyon
existingroutes,andnotedincreasesinspansofservice.Theseserviceswillincludenew
frequentpeakhourexpressesandalldayregionalrapidservicesbetweenAlohaStadium
StationandmajorcommuterdestinationsincludingDowntownHonolulu,UHManoa,
Waikiki,andEastHonolulu.Thesenewserviceswilloperateuntilfurtherrailextensionsare
openedforoperations,atwhichtimetheywillceaseandberestructuredandreallocated.
7.2.2 InterimOpening2EastwardExtensionfromAlohaStadiumStation
toMiddleStreetStation
Apotentialsecondinterimopeningnear2023couldextendtheinitialinterimsegment
approximately5milesandthreestationsbeyondtheAlohaStadiumStationtotheMiddle
StreetStationviatheHonoluluInternationalAirport.Thisistherailoperationalalignments
firstentryintotheurbancoreofHonoluluandprovidestheadditionalbenefitofinterfacing
directlywiththeHonoluluInternationalAirport.Atthispoint,however,theoperating
alignmentstilldoesnotreachthehighestdensityofridersinurbanHonolulunearthe
DowntownStationandtheplannedterminusatAlaMoanaCenterStation.Connectingbus
networkswillbeadjustedaccordinglyduringthisphasebutwillnotreachfinalmajor
changesuntilthefulloperationallineiscompleted.
7.2.2.1 PearlHarborStation
Thisstationlacksspaceforanadjacenttransitcentertofacilitatebustransferstothe
nearbyPearlHarborNavalShipyardandtheJointBasePearlHarborHickam.Transfersto
buswilloccurattheneighboringAlohaStadiumStation.
Noincreasesinserviceareplannedforthisstationexceptforrelatedfrequencyandspanof
servicecostsincurredatneighboringstationsthatareservicedbythesametrunkand
regionalrapidservices.
7.2.2.2 AirportStation
Existingtrunkserviceswillcontinuetooperateandservethisstation.Asmallscaletransit
centerisintegratedintothedesignofthisstationsite.Sometrunkroutesservicingthe
airportwillberestructuredintocommunitycirculatorrouteswithextendedservicespansto
connectthisstationtotheMakalapa,Aliamanu,SaltLake,andMoanaluaneighborhoods.
Moderateserviceincreasesareplannedforrestructuredandextendedservice,increased
frequencyonexistingroutes,andincreasesinspansofservice.
7.2.2.3 LagoonDriveStation
NocurrentexistingservicesoperateintheareaofLagoonDriveStation;however,new
servicesareplannedtoconnectcommunitycirculatorstothestationwithacollaborative
planningeffortbetweenDTS,HART,andtheStateDepartmentofTransportationtoplan,
design,andconstructabusturnaroundloopfornewroutesservingtheLagoonDrive
Station.ThesecirculatorswillconnecttheLagoonDrivestationtotheAirportIndustrial
AreaaswellastheSaltLake,Moanalua,Mapunapuna,andKalihineighborhoods.
DuringtheproposedinterimextensiontoMiddleStreet,formernewfrequentpeakhour
expressesandalldayregionalrapidservicesoperatingbetweenAlohaStadiumStationand
majorcommuterdestinationsincludingDowntownHonolulu,UHManoa,Waikiki,andEast
HonoluluwillbediscontinuedatAlohaStadiumStationandimplementedatLagoonDrive
stationforconvenientaccesstotheH1Freeway.Majorincreasesareplannedfornew
services,increasedfrequencyonexistingroutes,andincreasesinspansofservice.Although
thisisthepenultimatestopintheinterimextension,itisthemostpracticallocationto
transfertoandefficientlyrouteconnectingrailaccessservices.Theseserviceswilloperate
untilthefinalopeningoffullrailoperationstoAlaMoanaCenterStation,atwhichtimethey
willceaseandberestructuredandreallocated.
7.2.2.4 MiddleStreetStation
MiddleStreetStationwillconnectdirectlytotheKalihiTransitCenter,thelargestbus
transitcenterinurbanHonolulu.Majortrunkandregionalrapidserviceswillcontinueto
operateandservethisstation,withhighfrequencyroutingsandalargenumberof
originatingandendingtrips.Communitycirculatorswillbeimplementedtoconnectwith
KalihiUka,KalihiWaena,andKalihiKaineighborhoods.Restructuredservicetoandfrom
WindwardOahuwillinterfacewithrailattheMiddleStreetStation.
Majorserviceincreasesarerequiredforbusroutesatthisstationaswellastoincrease
capacityandfrequencyonexistingurbanHonolulucorridortrunkroutestoanticipateand
affordcapacitywiththeoverlayofthehighcapacityrailoperationsconnectingtothe
existingbusnetwork.
7.2.3 FullOpeningEastKapoleiStationtoAlaMoanaCenterStation
Thefullopeningofrailtoservicetheentireplanned20.1mile,21stationcorridor
representsthelargestscaleimplementationandrevisionofconnectingbusandparatransit
operations.PeakhourexpressroutestotheentireislandofOahuexceptingWindwardand
Eastregionscanbescaledbackandconvertedtohighfrequencypeakhourserviceswhich
interfacetotherailalignment.Thispotentialsavingsinbusoperatingexpensescanbe
appliedtocreatingbetterconnectionsatallstations,emphasizingmaukatomakai(inland
toocean)busroutealignmentsthatconnectatrailstations.Allneighborhoodcommunity
circulatorconnectionsinpreviouslydetailedstationbasedplanswillberevisedand
adjustedaccordingtonewprojecteddemandforservices.Thefollowingsummarizes
stationbasedchangesforthenewstationscomingonline.
7.2.3.1 KalihiStation
Newtrunk,regionalrapid,andcommunitycirculatorservicesconnectingtoKalihiUkaand
KalihiKaiwillbeimplementedtoservethisstation.Moderateserviceincreasesareplanned
forallnewroutesandincreasesinspansofservice.
7.2.3.2 KapalamaStation
Newtrunk,regionalrapid,andcommunitycirculatorservicesconnectingtoKamehameha
Heights,AlewaHeights,andKalihiKaiwillbeimplementedtoservethisstation.Moderate
serviceincreasesareplannedforallnewroutesandincreasesinspansofservice.
7.2.3.3 IwileiStation
Newtrunk,regionalrapid,andcommunitycirculatorservicesconnectingtoLilihaand
Nuuanuwillbeimplementedtoservethisstation.Moderateserviceincreasesareplanned
forallnewroutesandincreasesinspansofservice.
7.2.3.4 ChinatownStation
Existingandnewtrunkandregionalrapidserviceswillbecontinuedandimplementedto
servethisstation.Moderateserviceincreasesareplannedforallnewroutesandincreases
inspansofservice.DTSandHARTarecollaborativelyplanningmajorpedestrianaccess
infrastructuretoimproverailandtransitaccesstothestation.
7.2.3.5 DowntownStation
Existingandnewtrunkandregionalrapidserviceswillbecontinuedandimplementedto
servethisstation.Moderateserviceincreasesareplannedforallnewroutesandincreases
inspansofservice.Thisstationdoesnothaveadequatespaceforanadjacentbustransit
center.MajortransitconnectionswillbemadeattheneighboringCivicCenterStation.
7.2.3.6 CivicCenterStation
ServicesfromWindwardOahuwillterminateattheCivicCenterStationinKakaako.New
trunkserviceswillbeimplementedtoservethisstation.Communitycirculatorservices
connectingthisstationtoPacificHeights,Pauoa,Papakolea,andMakikiwillalsobe
implemented.Additionally,rapidbusservicestoconnectthisstationtoAlaMoana,Waikiki,
UHManoa,andEastHonoluluwillbeinstalled.
Majorserviceincreasesareplannedforallnewroutesandincreasesinspansofservice.DTS
isplanningatransitmallandonstreettransitcenterforthisstation,aswellasrelated
dedicatedpedestrianandcycletrackinfrastructure.
7.2.3.7 KakaakoStation
CommunitycirculatorservicesconnectingthisstationtoMakikiwillbeimplemented.
Moderateserviceincreasesareplannedforallnewroutesandincreasesinspansofservice.
7.2.3.8 AlaMoanaCenterStation
Majorexistingtrunkrouteswillseeservicefrequencyandspanincreases.Additionally,
rapidbusservicestoconnectthisstationtoWaikiki,UHManoa,andEastHonoluluwillbe
implementedwithcommunitycirculatorsconnectingthisstationtoMakiki,Manoa,and
Moiliili.Majorserviceincreasesareplannedforallnewroutes,andincreasesinexisting
frequenciesandspansofservice.DTSisplanningtwobustransitcentersadjacenttothe
stationtofacilitateanticipatedhighratesoftransfersandpedestrianwalkuppassengers.
Amajorbusrapidtransitprojectisplannedtoconnecttheterminusoftherailalignmentto
thehighpopulationandjobdensitydestinationofWaikiki.
7.3 OperatingPlanasSubmittedtoFTAonDecember1,2016
Asstatedinthepriorsections,thedetailedplanningfortheintegratedtransportation
systemhasbegunandwillcontinuetoberefinedoverthenextseveralmonths.Ultimately,
anyproposedchangestoexistingservicewillinvolveapublicreviewprocess.TheOperating
Planwillbecontinuouslyupdatedtoreflectthesedetailedoperatingplans.
ThefollowingsectionistheupdatetotheoriginalOperatingPlan(June2012)thatwas
transmittedtotheFTAonDecember1,2016.Theupdatesincludetheimpactsofthe
changeininterimandfullrevenueservicedates;actualcostescalationratestodate;
updatedridershipprojections;andotheroperatingchanges(suchasfaregatesinsteadof
fareenforcement).
AswiththeoriginalFinancialPlan(June2012),theupdatedFinancialPlanreflectsthe
currenttransitpoliciesappliedtothefutureintegratedtransitsystem.ThecurrentCity
policyofsettingfarerevenuerecoveryrateis27%to33%ofoperatingcosts.Thecurrent
fareratecategoriesremainconstantintheupdatedFinancialPlan.Byholdingthesefactors
constant,thisupdatedOperatingPlanprojectionwillserveasabasecomparisonfor
changestofarepolicies,faredifferentials,andservicelevels.
7.3.1 Introduction
ThisreportupdatestheOperatingPlanportionoftheoriginalCity'sFinalFinancialPlanfor
FFGA,June2012.ThisupdatedFinancialPlanisbasedonthe20.1mileroutewithfull
revenueservicestartingDecember2025.InterimservicemaybegininDecember2020to
AlohaStadium.
TheProjectwillbefullyintegratedwithTheBusoperations,whichwillbereconfiguredto
addfeederbusservicetoprovideincreasedfrequencyandmoretransferopportunities
betweenbusandrail.Thenewrailandmodifiedbusservicewillprovideadditionaltravel
options,increaseservicefrequencies,expandthehoursofoperation,minimizewaittimes,
reducetotaltraveltimes,improveservicereliability,andenhancecomfortandconvenience
forpassengers.
7.3.2 UpdateSummary
7.3.2.1 OriginalFinancialPlan
ThefollowingtablesummarizesthefinancialelementsintheoriginalFinancialPlanthatwas
releasedinJune2012.ThetablecomparesFY2011actualwiththefirstfullyearof
operationsinFY2020ininflatedYOEdollars.
Table71: OriginalFinancialPlanFigures,June2012
FY 2011 Original %
Change
Actual FY 2020 Change
BusCost YOEmillion$'s $173 $263 $90 52%
HandiVanCost YOEmillion$'s $34 $59 $25 73%
RailCost YOEmillion$'s $0 $113 $113
CombinedTotal YOEmillion$'s $207 $435 $228 110%
BusServiceHours millions 1.38 1.58 0.20 14%
FareRevenue YOEmillion$'s $54 $110 $56 104%
AverageFare YOE$'s $0.93 $1.30 $0.37 40%
Subsidy YOEmillion$'s $133 $307 $174 131%
7.3.2.2 UpdatedOperatingCosts
Projectingrailoperatingcostsisatwostepprocess.Thefirststepistoupdatetheoperating
planintoday'scurrentdollarsincorporatingallknownchanges(forexample,fourcartrains,
faregates,andpowerconsumptionestimates).Aftercapturingcurrentrealchanges,the
secondstepistoconvertcurrentyearcostfiguresintoYOEdollarsbyselectingan
inflationaryfactor.
UpdatedrailcostsincurrentyeardollarsareasprojectedintheoriginalFinancialPlan
(June2012).However,projectionestimatesincertaincostcategoriesvaryconsiderably
fromtheoriginalprojections.
ThesecurrentyearcostestimatesarethenconvertedtoYOEdollars.TheoriginalFinancial
Planappliedvariousescalationfactorstoeachcostcategory(forexample,coresystems,
powercosts,andstationmaintenance).Thisupdateprovidesarangeofcostescalation
scenariosanddetailstheirimpacts.
BuscostshavebeenasanticipatedintheoriginalFinancialPlan.Thehistoricalannual
increaseinbuscostsperrevenueservicehourintheoriginalOperatingPlanwas3.9%.The
actualcostperrevenuehouroverthelast10yearsis3.1%reflectingtherecentlowerfuel
prices.TheupdatedFinancialPlanestimatesbuscostsperrevenueservicehourstoincrease
atapproximatelythesamelevelastheoriginalFinancialPlan'shistoricalcost.HandiVan
hasexperiencedthecostincreasesasprojectedintheoriginalOperatingPlan.
7.3.2.3 UpdatedRidership
Ridershipisprojectedusingatraveldemandmodelwithinputsfromcustomersurveydata.
Amorerobustregionalplanningmodeliscurrentlybeingutilizedtoforecastridershipin
conjunctionwithafaremodelingstudy.Approximately258,000dailylinkedtripswere
estimatedinthefirstfullyearofabusandrailcombinedsystemin2020.Theforecastgrew
to280,000linkedtripsperdayin2030forthebusandrailcombinedsystem.Theupdated
forecastestimatesapproximately279,000linkedtripsinthefirstfullyearand313,000in
thetenthyear.
P
Page88of213 HonoluluRa
ailTransitPrroject
RecoverryPlanSep
ptember15,2017
Withrespecttoaactualboardingtodate,actualboar dingandtheeoriginalFin nancialPlan

foreccastbegantoodivergeinFY2013.The ereareanummberoffacttorsthatmayhave
contrributedtothhissituation,,butservicehourreducttionsandthedecreasinggpriceoffuel
beginnninginMayy2014arelikkelycontribu utors.Theu pdatedridershipforecaastcommencces
attheecurrentrid
dershipresulltsfromFY20 016.
Farerateincreasesarecomp parabletoCo onsumerPri ceIndexAllUrbanConssumers(CPIU)
Planfactors.Similartoth
increasesutilizinggtheoriginaalFinancialP hecostscen
narios,this
ncialPlanalssodetailsthe
Finan eimpactofllowerridershipfiguresaanditsimpactonfareraates
andssubsidylevells.
7.3.3
3 OperattingCostU
Update
7.3.3.1 RailO&MCosts
Theaassumptionssincorporate edintheorigginalFinanc ialPlanwereemostlyconnceptual,asfinal
desiggnswerenottdevelopedbytheplan''sreleaseinJune2012.TThisupdateofrailO&M M
costsisbasedoninformation nobtainedaandprojectddevelopmen ntsbetweenJune2012aand
Noveember2016.Theseupdaatedfiguresw willbecontiinuallyrevieewedasdesignsarefinalized,
operaationandmaintenanceccontractsaresecured,aandorganizaationalstructturedevelop ps.
Theffollowingfigurereflectstheoperatin
ngcostsinthheoriginalO OperatingPlaan.CoreSysstems
Contrractandpow werrepresenntnearly80% %ofalloperratingcosts..
FFigure71:: OriginalFinancialPlanRailC
CostsinFYY2020,YOEEDollars(M
Millions)

Proje
ectingrailopperatingcosttsisatwosttepprocess.Thefirststeepistoupdaatetheoperrating
planintoday'scuurrentdollarrsincludingaallknowncoontractawarrds,finaldessigns,system
m
changgessuchasffaregatesanndfourcarttrains,proceesschanges,,andenergyyconsumptio on
proje
ections.Aftercapturingccurrentrealchanges,th esecondsteepistoconvvertcurrentyear
costffiguresintoffutureYOEd
dollars.
Thefollowingtablecomparestheupdatedcostestimatestotheoriginalfinancingcost
estimateforFY2016.Inotherwords,iftherailsystemswereopenedtoday,whatwouldthe
costbeusingthecontractualcostoftheAnsaldocontract,currentelectricalrates,power
consumptionestimates,etc.Thetablerevealsthattotalrailcostsincurrentdollarsare
approximatelyasprojectedintheoriginalFinancialPlan.However,deviationsexistwithin
thevariouscostcategories.Thesedeviationsareexplainedinthefollowingsections.
Table72: UpdateofRailO&MCosts,2016Dollars(Millions)
FFGAFirstFullYearofOperations,June2012: UpdatedFY2017:
In FFGA Inflated Inflated Inflated Updated Change

Constant Inflation toCostin toCostin toCostin Amountin fromFFGA
$'smil. Factor FY2017 FY2020 FY2026 Current$'s FY2017
CoreSystemsLabor $25.5 1.2% $27.1 $27.9 $29.9 $36.1 $9.1
CoreSystemsMaterials $20.2 3.6% $24.1 $27.3 $34.0 $20.5 $(3.6)
CoreSystemsAdmin $13.1 1.2% $13.9 $14.5 $15.6 $13.9 $
SubtotalCoreSystems $58.8 $65.1 $69.8 $79.5 $70.6 $5.5
HARTAdmin $10.4 2.5% $11.8 $12.7 $14.7 $7.0 $(4.8)

PowerCosts $18.3 0.8% $19.1 $19.5 $21.8 $16.5 $(2.5)
GuidewayMaintenance $1.9 2.5% $2.2 $2.4 $2.7 $2.65 $0.4
SecurityPatrols $0.7 2.5% $0.8 $0.8 $1.0 $2.00 $1.2
FareEnforcement $1.8 2.5% $2.0 $2.2 $2.6 $ $(2.0)
FareCollection $2.4 2.5% $2.8 $3.0 $3.4 $3.33 $0.6
StationMaint. $2.1 2.5% $2.3 $2.5 $2.9 $2.83 $0.5
Water $0.01 2.5% $0.01 $0.01 $0.02 $0.03 $0.0
SubtotalHART $37.7 $41.0 $43.1 $49.2 $34.3 $(6.6)
TotalProjectedO&M $96.5 $106.0 $112.8 $128.7 $104.9 $(1.1)
7.3.3.1.1 CoreSystemsContract
TheCoreSystemsContractwassignedwithAnsaldotooperateandmaintaintherailsystem.
TheO&McostsfortheProjectweredevelopedusingpricesfromtheCoreSystemsContract
awardedin2011.TheCoreSystemsContracthasformulastoconvertthebidaward's2011
dollarstoYOEdollars.TheformulasarebasedonindicespublishedbytheUnitedStates
BureauofLaborStatistics(BLS)forlaborcostsandmaterialcosts.Thecontract'slaborindex
isbasedontheHonoluluAverageHourlyEarningsofProductionEmployeesintheTrade,
Transportation,andUtilitiesSector.Thematerialsindexisacompositeoftwonational
ProducerPriceindexesforLineHaulandRapidTransitCars.
FortheoriginalFinancialPlan,11yearsofhistoricaldatafromtheBLSwereusedtoescalate
theO&McoststhatareincludedintheCoreSystemsContract.Thegreatestdeviationfrom
theoriginalFinancialPlanistheCoreSystemslaborescalationfactor.TheCoreSystems
ContractwassignedinNovember2011.Thefollowingfigureshowsthelaborindexspikedin
earlycalendaryear2012,reflectingthepentuppressureafterthe"GreatRecession."
Averagehourlywagesgrew$4.88perhour(27%)fromthepreviousyearinMay2013.
Similarspikesintheaveragehourlyrateincreasewereexperiencedinothermajorsectors
oftheHonolulueconomysuchastherestaurant,hotel,andconstructionsectors.
ContractuallythelaborCAGRpeakedatanannualizedrateof17%inearly2013.TheCAGR
forthislaborindexfromtheexecutionofthecontractinNovember2011throughAugust
2016hassincedroppedtoapproximately7%.Thislaborindexhasaveragedonly1.3%
growthperyearoverthelasttwoyears.Despitethefallinggrowthrate,iftherailsystems
startednow,theescalationwouldaddapproximately$9milliontooperatingcosts.
Figure72: HonoluluLaborIndex,August2016
LaborIndexCompoundedAnnualGrowthRate HonoluluLaborIndexes
8.0%
7.1% AvgHourlyWage%ChangefromPriorYear
7.0% 6.3% 50.0
6.0% 38.4
40.0
5.0% 27.0
30.0 CoreSystemsIndex
4.0%
3.0% %Change 20.0 15.8 Hotels
3.0%
1.8% 10.0 Restaurants
2.0% 1.3% 1.2% 7.6
0.0 Construction
1.0%
2012Jan
2013Jan
2014Jan
2015Jan
2012Oct
2013Oct
2014Oct
2012Jul
2013Jul
2014Jul
2012Apr
2013Apr
2014Apr
0.0% 10.0
Jan2001May Nov2011 Last4Years Last3Years Last2Years Last1Year
2012 Aug2016 20.0

AvgHourlyWageChangefromPriorYear HonoluluAvgHrEarningsIndex
$6.00 $28
$4.88
$26
$5.00
$24
$4.00 $22
$3.00 $20
$2.00 $18
$16 AnsaldoAgreement
$1.00 SignedNov2011
$14
$0.00 $12 "Great Recession",
Dec2007toJune2009
2002Jan
2002Sep
2004Jan
2004Sep
2006Jan
2006Sep
2008Jan
2008Sep
2010Jan
2010Sep
2012Jan
2012Sep
2014Jan
2014Sep
2016Jan
2003May
2005May
2007May
2009May
2011May
2013May
2015May
$1.00 $10
2001Jan
2003Jan
2005Jan
2007Jan
2009Jan
2011Jan
2013Jan
2015Jan
2001Sep
2002May
2003Sep
2004May
2005Sep
2006May
2007Sep
2008May
2009Sep
2010May
2011Sep
2012May
2013Sep
2014May
2015Sep
2016May
$2.00
$3.00

Unlikethelaborindex,thematerialscompositeindexismuchlowerthantheoriginal
OperatingPlanprojections.Thematerialsindexwasexpectedtogrowat3.6%annually.The
followingfigurehighlightstheactualchangeinthematerialscompositeindexiswellbelow
theoriginalprojectionthroughAugust2016.Thisactualindexchangerepresentsa
$3.6millionsavingsfromtheoriginalplan.
Figure73: CoreSystemsMaterialsIndexUpdate
MaterialsCumulativeEscalation
20% 18.1%
18%
15.1%
16%
14%
11.1%
12%
10%
7.3%
8%
6% 3.6%
4% 5.8%
5.0%
2% 3.6%
0% 2.2% 2.0%
2012 2013 2014 2015 2016
OriginalProjection ActualEscalation

7.3.3.1.2 CityCostResponsibilities
TheremainderoftherailO&MserviceswillbetheresponsibilityofDTS,basedonthe
passageofCharterAmendment4intherecent2016elections.Thesecostsincludethe
following:powercosts,guidewaystructureinspectionsandmaintenance,securitypatrols,
farerevenuecollectionandequipmentservicing,fareinspectionandenforcement,station
maintenance(includingescalatorsandelevators),andcostsassociatedwiththestaffingof
administrativeandmanagementpersonnel,includingoverhead,fortheorganization.
7.3.3.1.3 HARTandCityAdmin
TheoriginalFinancialPlanassumedthattheHARTorganizationwouldinclude86fulltime
equivalentpositionsinthefirstfullyearofoperations.Thecostestimatesintheoriginal
planassumedastandaloneorganizationwithafullcomplementofstaffing,including
supportpositionsuchashumanresources,accounting,andinformationtechnology.There
wasnoconsolidationofserviceswiththeCityorthebusoperator.WiththerecentCharter
organizationalchanges,theplanwillbeupdatedbasedonneworganizationalstructures
andresourceneedsdevelopedoverthenextyear.
7.3.3.1.4 PowerCosts
ThelargestoperatingcostbesidestheCoreSystemsContractiselectricalpower.The
originalOperatingPlanbaseditspowerconsumptionanddemandprojectionfrom
estimatesintheCoreSystemsContractor'sproposal.Thepowerpriceprojectionwasbased
onthencurrentindustrialratesandescalatedratesgraduallyovertheprojectionperiod.
Theseoriginalestimateshavebeenreviewedandupdatedrelativetocurrenttrack
alignmentandfourcartrainoperations.
Thefollowingtableincorporatesthecurrentpowerconsumptionanddemandfigureswith
thecurrentindustrialelectricalratestocalculatethecurrentdollarimpactforpowercosts.
Thetablereflectstheimpactoftheupdatedpowerconsumptiontotalthatincreasespower
costsby$1.8million.Thispowerconsumptionincreaseisoffsetbyadecreaseinelectrical
ratesof$3.1million,resultinginatotaldecreaseinpowercoststo$16.5millionincurrent
dollars.The$1.8millionsavingsgrowsto$2.5millionwhentheoriginalplanisescalatedto
currentyeardollars.
Table73: PowerConsumptionandRateVariances
Original Update
Change % Change
Plan 2016
PowerRateComparison:
Usageperkwh $0.22 $0.157 $(0.06) 29%
TractionDemandperkw $18.86 $24.34 $5.48 29%
StationDemandperkw $11.11 $24.34 $13.23 119%
VolumeComparison:
EnergyConsumptionkwh 69,470,784 77,137,606 7,666,822 11%
Demandkw 10,920 11,355 435 4%
CostUpdate:
AnnualPowerCost $18,303,028 $16,545,748 ($1,757,281) 10%
CostVariance:
ChangeinRates ($3,112,227)
ChangeInVolume $1,777,130
MixVariance ($422,184)
TotalVariance ($1,757,281)

7.3.3.1.5 FareCollectionandEnforcement
Ticketvendingmachineswereoriginallyenvisionedfortherailsystemwithfare
enforcementofficersverifyingpayment.Anewautomatedintegratedfarecollectionsystem
thatcanbeusedthroughouttheentiretransportationsystemiscurrentlybeing
implemented.Inaddition,theProjectnowincludesfaregatestherebyeliminatingonboard
fareenforcement.Theintegratedfarecollectionsystemandotherassociatedcosts
increasesrail'sshareofcollectioncoststo$3.3millionincurrentdollars,anetincreaseof
$0.6million.
7.3.3.1.6 GuidewayandStationMaintenance
TheCoreSystemsContractorisresponsibleforallmaintenanceassociatedwithoperating
therailsystem,includingalltrackandequipmentontheguideway.DTSwillberesponsible
toinspectandmaintaintheguidewaystructure,stationstructures,andstationelevators
andescalators.Theestimateincludesresourcestocovermandatedguidewayinspection,
graffitiremoval,andelevator/escalatorrepair,andincludesreservestoaccumulatefor
majorstationandguidewayrepair.Theupdatedfiguresincreasebothguidewayandstation
maintenancebyapproximately$0.5millioneachforacombinedtotalofapproximately
$4millionperyear.
7.3.3.1.7 Security
Therailsystemwillhaveover1,650securitycameras,emergencyandinformationcall
points,sophisticatedsecuritysoftware,aswellassecuritystaffing.Theoriginalsecurityplan
includedaneightpositionstaffaswellasfareenforcementofficers.Theincreaseof
$1.2millioninthecostofsecurityreflectstheneedtoincreasestaffingtooffsetthe
reductionsinpriorplan'sfareenforcementofficers.
7.3.3.1.8 CostAdjustmentsRelatedtoInflationaryGrowthRates
Oncetheoperatingcostsaredeterminedincurrentdollars,thesecostestimatesmustbe
convertedtofutureYOEdollars.Thefollowingtableprovidesescalatedcostsundera
varietyofinflationassumptions.Thechartdemonstratesthatthefuturefirstyearoperating
costscouldvaryfromapproximately$127millionto$144milliondependingonescalation
assumptions.
Table74: RailCostsunderVariousInflationAssumptions
InflationFactorScenarios:
Continue
FFGA Change Change Change
Escalation From Honolulu From From
Factorto FFGAFY CPItoFY FFGAFY Custom FFGAFY
CostCategory FY2026 2026 2026 2026 Inflation 2026
CoreSystemsLabor $40.5 $10.5 $46.7 $16.7 $51.5 $21.5
CoreSys.Materials $30.0 $(4.0) $27.2 $(6.8) $27.4 $(6.6)
CoreSystemsAdmin $14.9 $(0.7) $18.8 $3.2 $19.1 $3.5
Subtotal $85.3 $5.8 $92.6 $13.1 $98.0 $18.5
HARTAdmin $8.7 $(6.0) $8.8 $(5.9) $8.8 $(5.9)
PowerCosts $19.1 $(2.7) $21.5 $(0.4) $23.6 $1.8
GuidewayMaint. $3.3 $0.6 $3.3 $0.6 $3.3 $0.6
SecurityPatrols $2.6 $1.6 $2.5 $1.6 $2.5 $1.6
FareEnforcement $ $(2.6) $ $(2.6) $ $(2.6)
FareCollection $4.3 $0.8 $4.2 $0.8 $4.2 $0.8
StationMaint. $3.5 $0.6 $3.6 $0.6 $3.6 $0.6
Water $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
SubtotalHART $41.5 $(7.6) $43.9 $(5.2) $46.1 $(3.0)
TotalProjectedO&M $126.9 $(1.8) $136.6 $7.9 $144.1 $15.5
7.3.3.1.9 ContinuingOriginalPlanMethodology
Thisprojectionscenarioappliestheoriginaloperatingplaninflationfactorstocurrentdollar
costestimates.Underthisscenario,thelaborindexforCoreSystemswouldcontinuetofall
backtohistoricaltrendlines,andpowercostsinflationwouldremainlow.CoreSystems
materialinflationwouldreverseitscurrentlowtodateescalationandgrowatitsoriginal
FinancialPlanannualrateof3.6%.
Inthisscenario,totalrailO&Mcostwouldtotalapproximately$127millioninthefirstfull
yearofoperations.Thisscenariowouldresultinacostsavingsof$1.8millionperyearover
theoriginalFinancialPlancostprojectioninflatedtotheDecember2025startingdate.
Figure74: ComparisonofCostEscalationScenarios,FY2026FY2036,
YOEDollars(Millions)
$190
$170
$150
YOE$millions
$130
$110
$90
$70
$50
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
OriginalPlanShifted Continue/UpdateOriginalPlan
HonoluluCPI Custom:Power&Labor>CPI

7.3.3.1.10 ModerateRangeScenario
AlthoughtheHonoluluLaborIndexgrowthratehasdecreasedfromitspostrecessionspike
andelectricratestodatehaveactuallydecreasedfrom2012,thisscenarioincreases
currentdollarprojectionsbytheHonoluluCPIU,providinganothercostperspective.This
scenariousestheStateDepartmentofBusiness,EconomicDevelopmentandTourism's
(DBEDT)mostrecentHonoluluCPIUforecast(November15,2016)through2019,andthen
stepsupCPIUfrom2.6%to2.8%annually.
Inthisscenario,totalrailO&Mcostwouldtotal$136.6millioninthefirstfullyearof
operations.Thisscenariowouldresultinacostincreaseof$7.9million(6%)peryearover
theoriginalFinancialPlancostprojectioninflatedtotheDecember2025startingdate.
7.3.3.1.11 HighCostRangeScenario
TheCoreSystemslaborandpowercostsrepresentapproximately50%ofthecurrent
updateforrailcosts.Todate,thesecostshaveexhibitedthemostvolatility.Amore
conservativeforecastingapproachwouldbetoassumehigherescalationfactorsthanunder
theoriginalFinancialPlanmethodology.Increasingthesetwocostcategoriesapproximately
1.4timesCPIUresultsintotalrailcostincreasingto$144million(11%)inthefirstfullyear
ofoperations.
Figure75: CoreSystemsLaborIndexandIndustrialPowerCorrelation
LaborIndexCompoundedAnnualGrowthRate EnergyRatevsOilPrices
8.0% $0.26 $90
7.1%
7.0% $0.24 $80
6.3%
6.0% $0.22 $70
PriceperBarrel
EnergyRates
5.0% $0.20 $60
4.0% $0.18 $50

3.0%
3.0% $0.16 $40
1.8% $0.14 $30
2.0% 1.3% 1.2%
1.0% $0.12 $20
0.0%
Jan2001May Nov2011 Last4Years Last3Years Last2Years Last1Year
2012 Aug2016 EnergyCharge OilPrice

7.3.3.2 TheBusO&MCosts
IntheoriginalFinancialPlan,TheBusO&Mcostsweredevelopedusingexistingbus
operationsasthebaselineaswellasanticipatedservicelevelsthroughFY2030.TheBus
O&McostingmethodologyusesaresourcebuildupapproachthatfullyallocatesO&M
costsbasedonlevelofservicevariables.Eachunitcostisbrokendownbyobjectclass
whichallowsforapplyingdifferentinflationratestoeachobjectclass.Theoverall
compositecostbasedonrevenueservicehourswasa3.2%annualcostincrease.
ThefollowingfigurecomparestheinflationarygrowthfactorscitedintheoriginalFinancial
Planfrom20062011(3.9%),theupdated10yearaverage(3.1%),andtheaverageusedin
theupdatedprojection(3.9%).Theupdatedprojectionusesamoreconservativeestimate
giventhatthemostrecentyearshaverealizedsavingsfromasharpdecreaseinfuelcosts.
Thetotalcostperrevenueservicehourforbusoperationsiscurrentlyapproximately$130.
Figure76: GrowthRatesofBusCostsperRevenueServiceHour
CostperRevenueServiceHour
4.50%
3.85% 3.90%
4.00%
3.50%
3.10%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
CAGR20062011 10YrAverage Projected

7.3.3.3 TheHandiVanO&MCosts
TheHandiVanisaparatransitserviceoperatingintandemwithTheBusandhasbeenin
operationsince1999.InFY2011,TheHandiVanservicedmorethan940,000tripswithan
associatedtotalO&Mcostofapproximately$34million.TheprojectedO&Mcostsfor
TheHandiVanarebasedontheFY2011costperrider,equalto$36.32,appliedtothe
projectedridership,andadjustedforinflation.
TheoriginalOperatingPlanassumedthatTheHandiVanridershipwouldincreaseatan
averageannualrateof1.8%fromFY2011toFY2030.TheoverallHandiVantotalcostwas
projectedtoincreasebetween5%to6%peryeargiventheincreaseinridershipand
inflation.FiscalYear2015actualresultsandtheoriginalFinancialPlanestimatewere
$44.8millionand$44.1millionrespectively.TheupdatedFinancialPlancontinuesthe
assumptionsintheoriginalFinancialPlanfortheHandiVan.
Figure77: HandiVanAnnualTripsandOperatingCosts
HandiVanTrips HandiVanOriginalProjectionvs.Actual
1,200 $50
Thousands
1,150
$40
1,100
$inMillions
$30
1,050
1,000 $20
950
$10
900
$0
850
2012 2013 2014 2015
800 Fiscal Year
2010 2011 2012 2013 2014 2015
Fiscal Year OriginalProjection ActualCost

7.3.3.4 OtherO&MCosts
TheFinancialPlanalsoincludesoperatingcostsassociatedwithothertransitservice
programs.Theprojectionincreasesovertimefromapproximately$1millioninFY2017,up
to$8millionperyearinFY2036.
7.3.4 OperatingRevenues
7.3.4.1 PassengerFares
7.3.4.1.1 FarePolicy
ACityresolutionstipulatesthatthefareboxrecoveryratio(FRR)forTheBusbemaintained
between27%and33%,whichdemonstratesacommitmentoftheCitytokeepoperating
costsandrevenuesgrowingatacomparablerateonaverage.TheCharterAmendment4
recentlyapprovedduringtheNovember2016GeneralElectioncreatedaFareCommission
taskedwiththeresponsibilityofestablishingfaresforTheBus,HandiVan,andtherail,
includingtransferpolicies.However,becausethisFareCommissionhasyettobe
establishedandthetimingforanyfuturedecisionshaveyettobedetermined,thisFinancial
PlanassumesthatthecurrentfarestructureforTheBuswillbemaintainedforbothTheBus
andtheProject,withfreetransfersassumedbetweenbothmodes.
ThebelowtabledetailsthehistoryofCityfareincreases.TheCitylastraisedfaresinJuly
2010.
Table75: TheBusFareStructureandHistory
One-way Cash Fare Monthly Pass
Effective Date
Adult Youth Adult Youth
March1,1971 0.25 0.15 N/A N/A
March2,1971 0.25 0.10 N/A N/A
June9,1972 0.25,0.50 0.10,0.25 N/A N/A
March15,1974 0.25 0.10 N/A N/A
November1,1979 0.50 0.25 15.00 7.50
June18,1984 0.60 0.25 15.00 7.50
October1,1993 0.85 0.25 20.00 7.50
July1,1995 1.00 0.50 25.00 12.50
July1,2001 1.50 0.75 27.00 13.50
July1,2003 1.75 0.75 30.00 13.50
October1,2003 2.00 1.00 40.00 20.00
July1,2009 2.25 1.00 50.00 25.00
July1,2010 2.50 1.25 60.00 30.00
N/A = Not Applicable
7.3.4.1.2 RidershipForecasting
Ridershipreliesonoutputsfromtraveldemandmodels.TheoriginalOperatingPlanwas
basedonatraveldemandmodelusedinthedevelopmentoftheEnvironmentalImpact
Study.TheupdateoftheOperatingPlanusestheregionalTravelDemandForecasting
Model(TDFM)oftheOahuMetropolitanPlanningOrganization(OahuMPO).Thisregional
TDFMuseslanduseandpopulationdatatoestimatetransitsystemusageatdifferent
horizonyears.
TheTDFMestimatesfutureislandwidevehiculartrafficflowsandtransitridershipbasedon
landuse,employment,populationcharacteristics,andanunderlyingtransportation
network.TheOahuMPOusestheTDFMduringlongrangeplanningeffortstoassessand
comparetheperformanceofdifferenttransportationprojectsrelativetoabaseline
scenario.
TheTDFMisatourbasedmicrosimulationmodelsystemthatusestheTransCAD6.0
softwarepackage.Themodelusesasyntheticpopulationandlanduseforecaststosimulate
andtrackthetravelpatternsofeachindividualorhouseholdinfutureyears.Thetourbased
modelsimulatesindividualdailytravelpatternsasaseriesoflinkedtripsortourswhich
beginorendathomeorwork.Tripsaresimulatedasoneofsevendifferenttourpurposes,
suchaswork,school,ornonmandatorytrips.Thetourbasedframeworkallowsconsistency
acrosstripmodechoicedecisions.Someonewhotakesabustowork,forexample,would
notbeabletouseacarforatripduringlunchbecauseheorshewouldnothaveacar
availabletomakethetrip.Thesimulationresultsarethenaggregatedandassignedtoa
transportationnetwork(highwayortransitservice).Simulationresultsarealso
supplementedbyforecastsoftourists,airportpassengers,andcommercialvehicletraffic.
MajorinputsintotheOahuMPOTDFMincludelongrangesocioeconomicforecasts
preparedbytheCityDepartmentofPlanningandPermittingin2015fortheOahuRegional
TransportationPlan.Longrangepopulation,housing,andemploymentforecastsfor2040
werelinearlyinterpolatedtodevelopintermediateforecastsfor2020and2030.Amonte
carlosimulationwasusedtofitasyntheticpopulationtothesetargets.Overall,thelanduse
inputsincludedapproximately3.4%fewerresidentsin2030thanpreviousprojections,ora
totalof1.1millionpeople.
Othermodelinputsincludedatafromthe2010UnitedStatesCensus,aswellastravel
behaviorsurveysof4,000householdsand950visitorsconductedin2012.Anonboard
surveyof26,300busridersin20122013wasalsoincorporatedintothemodel.These
surveyswereusedtocalibratethetravelmodechoicecomponentsofthemodelthatis,
howthemodelpredictsthatthesynthetictravelerswillchosetoridetransitordrivean
automobile.
AnothermajorinputintotheTDFMistheunderlyingroadwayandtransitprojectsthatare
assumedtobeinplaceatthetimeoftheforecastyear.Thisfaremodelingstudyincludes
thecommittedshortrangehighwayandtransitprojectsincludedinthe2040OahuRegional
TransportationPlansthatwasadoptedinApril2016.Proposedmidandlongrange
highwayprojectsthrough2029and2040,respectively,arenotincludedinthefaremodel
studyduetotheirimplementationhorizons.
TheTDFMalsoincludesanunderlyingbusroutenetworkinordertosimulatehowtravelers
willusethetransitsystem.AlthoughDTSisdevelopingthebusserviceplansthatwillbe
implementedwhentherailsystemopens,thisfarestudyusestwoscenariosforanalytical
purposes.
Thefullopeningforecastassumesthecomprehensivelongtermrestructuringofthebus
networkthatwasdescribedintheProject'sFEIS.Thisconceptuallongtermbusnetwork
includestheadditionofnewhighfrequencycommunitycirculators,truncationofregional
andpeakperiodexpressroutes,andamodestexpansioninthebusfleet.Overall,the2030
busnetworkincludedaroughly20%increaseinbusservicehoursover2011levelsandan
increaseinthepeakbusfleetof474vehicles(approximatelya10%increase).
InFY2011,TheBusreportedboardingscorrespondedtoapproximately55.5millionlinked
trips(takingtransfersintoaccount).TheoriginalOperatingPlanestimatedridershipfrom
theoriginaltraveldemandmodel.Approximately258,000dailylinkedtripswereestimated
inthefirstfullyearofabusandrailcombinedsystemin2020.Theforecastgrewto280,000
linkedtripsperdayin2030forthebusandrailcombinedsystem.Figure78displaysthe
originalFinancialPlanwiththeupdatedforecastedlinkedtrips.Theupdatedforecast
estimatesapproximately279,000linkedtripsinthefirstfullyearand313,000inthetenth
year.
Thefigurealsoshowsagaphasdevelopedbetween2012and2016.Beginningin2013,the
observedboardingandforecastbegantodiverge.Thereareanumberoffactorsthatmay
havecontributedtothissituation,butservicehourreductionsandthedecreasingpriceof
fuelbeginninginMay2014arelikelycontributors.Theupdatedridershipforecast
commencesatthecurrentridershipresultsfromFY2016.
Figure78: HistoricalandForecastedLinkedTripsforTheBusandtheProject,
FY2004FY2030,MillionsofTrips
120
100
80
Annual Linked Trips (Millions)
60
40
20
-
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Historical Original Forecast Updated Forecast

7.3.4.1.3 Fares
ThefollowingfigureillustratestheassumedfuturefareincreasesfromtheoriginalFinancial
Plan.Thisfigurecomparesthesteppedupfarechangesthatareusedasthebasisforthe
farerevenueforecast,ascomparedtoanannualincreasingaveragefare.Theoriginal
FinancialPlangrowthinaveragefareisassumedasa"stepfunction"withincreasesof
approximately$0.37inFY2017and$0.28inFY2023
Figure79: OriginalFinancialPlanFareIncreases,FY2011FY2030,
$1.80
Stepped Increase in Average Fare
Average Fare (annual CPI-U adjustments)
$1.60
$1.40
$1.20
$1.00
YOE $
$0.80
$0.60
$0.40
$0.20
$0.00
2011 2013 2015 2017 2019 2021 2023 2025 2027 2029
City Fiscal Year

7.3.4.1.4 ContinuingtheOriginalPlanRevenueandCostAssumptions
ThefollowingfigureupdatestheoriginalfareprojectionconsistentwithcurrentCitypolicies
andfareproducts.ThefigureillustratestheimpactoftheshiftindateofthefullRevenue
ServiceDate.Thisfigureassumestheupdatedratesbasedoncostescalationfactorsinthe
originalFinancialPlanaswellasrevenuefactorsdevelopedintheFEIS.Underthisscenario,
ratesincrease$0.20to$1.30inFY2020;to$1.50inFY2023;and$1.75inFY2031.
Figure710:AverageFareComparisonsOriginalvsUpdatedPlan,
$2.00
Update using Original
Plan Escalation Factors"
$1.80
Average Fare (annual
CPI adjustments)
$1.60
Original Plan June 2012
$1.40
$1.20
YOE $
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
Fiscal Year

7.3.4.2 FederalFunds
TheCitycurrentlyreceivesFederalfundsthroughFTA'sSection5307UrbanizedArea
FormulaProgram.AsmentionedinthesystemwidecapitalplanchapterofthisFinancial
Plan,themajorityofSection5307fundsareappliedfirsttoongoingcapitalneedswithany
surplusbeingusedforpreventivemaintenance.
BeyondtheProjectconstructionperiod,theFinancialPlanassumesthatSection5307funds
willbedistributedfirsttofundtheProjectCapitalAssetReplacementProgramandongoing
systemwidecapitalexpenditures;anyremainingbalancewillthenbeusedtofund
preventivemaintenance.TheupdatedFinancialPlanalsoincludesaprojected$1millionto
$2millionannuallyforotherfederalgrantprograms.
7.3.5 SystemwideOperatingPlan
7.3.5.1 OriginalFinancialPlanMethodology
Aspreviouslydiscussed,thisprojectionscenarioappliestheoriginalFinancialPlan
escalationfactorstoconvertcurrentdollarcostestimatestoYOEdollarsandutilizesthe
samefarerevenuefactors.Inthisscenario,totalrailO&Mcostwouldtotalapproximately
$127millioninthefirstfullyearofoperations.Thisscenariowouldresultinacostsavingsof
$1.8millionperyearovertheoriginalFinancialPlancostprojectioninflatedtothe
December2025startingdate.AveragefarerateswouldincreasewithCPIU.Theoriginal
FinancialPlanhadaveragefaresrisingfrom$0.93pertripto$1.58inthetenyearperiod
endinginFY2030.IntheupdatedFinancialPlan,averagefareswouldrise$0.17to$1.75
overthetenyearperiodendingFY2036.
ExhibitJ1,OperatingPlan,ContinuedOriginalPlanMethodology,inAppendixJprovides
therevenue,cost,andsubsidylevelthroughFY2036.
7.3.5.2 ModerateRangeScenario
Underthisscenario,railinflationarycostsgrowwithprojectedincreasesinCPIU.This
scenariowouldincreasetotalrailO&Mcostsbyapproximately$8million(6%)inthefirst
fullyearofoperationsovertheoriginalFinancialPlan'sFY2026projection.Theoriginal
FinancialPlanhadaveragefaresrisingfrom$0.93pertripto$1.58inthetenyearperiod
endinginFY2030.Inthisscenario,averagefareswouldrise$0.24to$1.82overthetenyear
periodendingFY2036.
ExhibitJ2,OperatingPlan,ModerateRangeScenario,providestherevenue,cost,and
subsidylevelthroughFY2036.
7.3.5.3 HighCostRangeScenario
Underthisscenario,railinflationarycostsgrowfrom3.6%to3.8%annuallyforthemost
volatilecostcategoriestodate:CoreSystemlaborandpowercosts.Growthinthesecost
categorieswouldincreasetotalrailO&Mcostsbyapproximately$15million(11%)inthe
firstfullyearofoperations.TheoriginalFinancialPlanhadaveragefaresrisingfrom$0.93
pertripto$1.58inthetenyearperiodendinginFY2030.Inthisscenario,averagefares
wouldrise$0.27to$1.85overthetenyearperiodendingFY2036.
ExhibitJ3,OperatingPlan,HighCostRangeScenario,providestherevenue,cost,and
subsidylevelthroughFY2036.
7.3.5.4 SlowerRevenueGrowthScenario
Currently,thereisnotanautomatedsystemtocaptureridershipstatistics.Thebusandrail
systemwillbeequippedwithanintegratedautomatedfarecollectionsystemthatwill
providefurtherinsightintocustomertravelhabits.Currently,surveysarepreformed
periodicallytodeterminecustomertravelhabits.Giventherelianceonsurveydata,
potentialchangingcustomertravelhabits,andothereconomicfactors,thisupdatemodels
theimpactofamoreconservativerevenuemodel.Thefigurebelowhighlightstheimpactof
a5%,10%,and15%reductioninridership.
Figure711:RidershipSensitivity,YOEDollars(Millions)
$115
Millions
$110
$105
$100
$95
$90
$85
$80
$75
$70
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
UpdatedProjection 5%ReductioninTrips 2036

10%Reduction 15%Reduction

ThelowerfarerevenueinFY2026reflectsthefull20.1milerailsystemstartinginDecember
2025,midwaythroughthefiscalyear.
HARThascontractedwithCH2MHillin2016toundertakemoredetailedfarestructure
implementationoptions,includingestimatedridershipandfarerevenueimpacts.Thecore
objectiveofthisstudyistoevaluatealternativefarestructure/farepolicyoptions,including
estimationofridershipandfarerevenueimpacts.Thisfaremodelwillbeusedtoestimate
theridershipandfarerevenueimpactsofalternativefarestructures,includingchangesto
fareproducts,fareratesandtransferpolicies.
ExhibitJ4,OperatingPlan,RidershipSensitivity,atCurrentAverageFareRate,providesthe
revenue,cost,andsubsidylevelthroughFY2036.
7.3.6 CityContribution
TheCity'scontributiontotransitO&Mexpensesisfundedusinglocalrevenuesfromthe
GeneralandHighwayFunds.TheGeneralFundcomprisesmostofitsrevenuesfromthe
followingtaxes:
RealPropertyTax:Taxonrealpropertybasedonassessedvalue;ratesvarywith
propertyclass.
StateTransientAccommodationsTax:7.3%taxonadwellingthatisoccupiedfor
lessthan180consecutivedays.TheCityhashistoricallyreceivedaportionofthese
revenues.
PublicServiceCompanyTax:TheCityreceives1.9%ofallpublicservicecompanies'
grossincome.
TheHighwayFundcomprisesmostofitsrevenuesfromthefollowingtaxes:
FuelTax:A16.5centpergallontaxonallfuelsoldorusedwithintheCity's
jurisdiction.
VehicleWeightTax:Ataxonthenetweightofallpassengerandnoncommercial
vehicles(5centsperpound),andmotorvehiclesandnonpassengercarrying
vehicles(5.5centsperpound).
PublicUtilityFranchiseTax:A2.5%taxonallelectricpowerandgascompanies'
grosssalesreceipts.
DuringtheperiodfromFY1994toFY2011,revenuesfromthesesourcestotaled$14billion,
ofwhichapproximately$1.5billion(11%)wenttotransit.ThepercentageinFY2015totaled
approximately13%.TheoriginalFinancialPlanpercentageinthefirstfullyearofoperations
totaledapproximately19%.TheupdatedFinancialPlan,assumingnochangeinfarepolicies,
fareproducts,andservicelevels,wouldincreasetoapproximately21%inthefirstoperating
year.
TheFinancialPlanforecaststhegrowthintheseCityFundsatanaggregatelevelandthe
resultingsharethatwillbeneededfortransitoperations.Thisforecastappliesthe
aforementionedCPIUinflationforecastinHonoluluaswellasarealrateofgrowthequalto
1.3%,whichisequaltotherealgrowthexperiencedbetweenFY1996andFY2011.
Increasesinothertransitrevenuesources,suchasadvertising,concessioncontracts,and
developmentopportunities,couldreducetheamountsrequiredtobetransferredfromthe
City'sGeneralandHighwayFunds.
Althoughtheactualfundingoftheoperatingcostswillinvolvefurtherindepthreviewand
extensivepublicdiscussion,additionaloffsetssuchasfaredifferentials,fareequity,cost
effectiverouting,potentialTODrelatedincreasestotaxrevenues,andotherrevenuescould
provideadditionalresourcesfortheProject.
7.3.7 OperatingCostRisks
7.3.7.1 CoreSystemsContract
Asdescribedearlier,approximately80%oftheProject'sO&Mcostwillbecoveredbythe
CoreSystemsDBOMcontract,includingpassthroughutilitycosts.TheO&Magreement
includespricingforlabor,materials,managementandadministrationnecessarytosupport
theO&MoftheProject.Assuch,therisksanduncertaintiesaroundunitpricesandservice
planarestronglymitigatedbythepresenceofthiscontractforuptotenyears.
7.3.7.2 CostEscalationLabor,HealthCareandEnergyPrices
EscalationrateswereappliedtoeachProjectO&McostcategoryfromtheCoreSystems
ContractandeachobjectclassforTheBusandTheHandiVanO&Mcosts.Thislevelof
disaggregationallowedforconsiderationofdifferencesinthegrowthoutlookforvarious
costitems,suchaslabor,healthcareorfuelprices,whichmayexpectedtoincreasefaster
thangeneralinflation.Inflationaryrisksanduncertaintiesdoremain,however,astheglobal
andlocalsupply/demandbalanceevolves.Thisisthecase,forexample,withenergycostsin
Honolulu,whicharehighlydrivenbyoilpricesandthereforearesubjecttoitsvolatility.
7.3.7.3 OtherTransportationCostsTheBusandHandiVan
TherisksanduncertaintiesoutlinedabovecouldleadtoahigherlevelofO&Msubsidy
requiredtooperateandmaintaintheCity'spublictransportationsystem,thatis,TheBus
andtheHandiVan.Inthebasescenarios,TheBusandHandiVanareprojectedtogrowat
higherthangeneralinflation.TheupdatedFinancialPlanprojectsTheBusoperatingsubsidy
(asmeasuredbyTheBusO&McostminusTheBusfarerevenues)perRevenueVehicleHour
(RVH)togrowatahigherrate(3.8%)thantheoriginalplan(3.2%).
TheHandiVanservicelevelsaredrivendirectlybyridershipgrowth.Theannualgrowthrate
inTheHandiVanridershipcontinuestobedrivenbytheprojectedgrowthinpopulation
above65yearsoldassuming70%ofthegrowth.TheHandiVan'scostsareprojectedto
growbetween5%to6%peryear.
7.3.8 OperatingRevenueRisks
Farerevenuesarebasedoncurrentdemandforecastsforridershipandacontinuationof
currentfarelevelsinrealterms,whichcouldbothchangeduetoanumberofshortterm
andlongtermfactorssuchasthefollowing:
Thestateoftheeconomy
Thelocaljobmarket
Populationgrowth
Trafficcongestiononroadsandmainhighways
Fuelprices
Landuseanddevelopmentplans
Whiletheexistingtraveldemandforecasthasmadesomeassumptionswithregardtoeach
ofthesevariables,thereareuncertaintiessurroundingthetimingandextentofeach.
TheoperatingrevenuesincludedintheFinancialPlanassumeperiodicfareincreasesthat
wouldmaintainaFRRforTheBusandrailbetween27%and33%,inaccordancewiththe
City'scurrentpolicy.However,theFRRwouldnotbemetiffaresarenotincreasedas
shownintheFinancialPlan.
Thefarerevenueforecasthasnottakenintoaccountanytemporaryridershipdecreases
thatcouldresultfromthefareincreasesbasedonpreviousexperiencedemonstratingthe
relativeinelasticityoftheCity'stransitdemandwithrespecttofares.Furthermore,thefare
increaseshavebeensizedtoincreasetheaveragefareatapproximatelythesamerateas
generalpriceinflation,butonalessfrequentbasis.Accordingly,thefareincreasesshould
haveaminimaleffectonridership.However,anyreductioninridershipasaresultofthe
fareincreasescouldleadtoalowerFRR.
7.3.9 PotentialMitigationStrategiesfortheOperatingPlans
7.3.9.1 AdvertisingandOtherNonfareOperatingRevenues
Expandingtheadvertisingprogramcouldgeneratesignificantlymorethanthe
approximately$100,000receivedbytheCityforbusadvertisements.Withtheintroduction
ofrailservice,notonlywilltherebeanabilitytoadvertisewithineachrailcar,butthe
stationswillalsopresentpotentialadvertisinglocationsforlocalbusinesses.Basedon2011
NationalTransitDatabasedata,Honolulureceivesapproximately$0.001perboardingin
advertisingrevenues,whilesimilarlargersizedsystemsreceiveadvertisingrevenuesthat
are10to100timesgreater,afteradjustingforridership.Othermiscellaneousoperating
revenueopportunitiesincludetheleaseofrightofwayfortelecommunicationsorthe
namingofstations.ThesefundscouldoffsettheCity'scontributiontoO&Mcosts.
7.3.9.2 ParkingRevenues
DemandforparkandridestationsisstronginHonolulu,andchargingevenanominal
amountfordailyparkingcouldgenerateasignificantamountofrevenue.Collectedparking
fundscouldbeusedforcapitaland/oroperatingexpenses,asparkingsurchargescouldbe
usedtooffsettheconstructioncostsoftheparkinggarages,orrevenuescouldbeusedto
offsetoperatingcostsofthegaragesincludinggarageattendantsandsecuritypersonnel.
7.3.9.3 ImprovementinServiceEfficienciesinTheBus,TheHandiVan,andRail
Operations
TheadditionoftheProjecttotheexistingtransitnetworkwilllikelyresultinsomeoverlap
ofservicebetweenbusandrail.Whilesomebusserviceandroutemodificationsare
plannedastheProjectisimplemented,thereisapossibilitytofurtherreduceredundancies
inthebusserviceasrailridershipgrows.Thiswouldhaveanimpactonongoingbusfleet
replacementcycles,whichcanleadtoreductionsinbothcapitalandO&Mcosts.
ProductivityonTheHandiVansystem,asmeasuredbythenumberofunlinkedtripsper
RVH,decreasedeveryyearbetweenFY2006andFY2010ataCAGRof1.9%.However,the
paratransitsystemexperienceditsfirstproductivitygaininsixyearsinFY2011,withriders
perRVHincreasingby3.3%.TheBaseCaseFinancialPlandoesnotincludeanyproductivity
gainsbeyondtheonealreadycapturedintheFY2011estimates.However,shouldthetrend
inproductivitygainscontinue,growthinTheHandiVanO&Mcostcouldbefurther
containedtomitigateagreaterincreaseinridership.

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HonoluluRailTransitProject Page13of213

Project Funding Sources:

Design 220 155 10 23 19 4 2 2 2 2 1 - - - - - - -

City Debt Reserve:

Withrespecttoaactualboardingtodate,actualboar dingandtheeoriginalFin nancialPlan

In FFGA Inflated Inflated Inflated Updated Change

HARTAdmin $10.4 2.5% $11.8 $12.7 $14.7 $7.0 $(4.8)

TotalProjectedO&M $96.5 $106.0 $112.8 $128.7 $104.9 $(1.1)

4.0% $0.18 $50

UpdatedProjection 5%ReductioninTrips 2036

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