Honolulu — Hawaii impact investment firm Ulupono Initiative today released the findings of its P3 Viability Assessment for the Honolulu Rail Transit Project. The comprehensive analysis, carried out by global infrastructure finance leader Jones Lang LaSalle (JLL), was initiated to help the City and County of Honolulu, State of Hawaii, and the Honolulu Authority for Rapid Transportation (HART) determine whether potential alternative finance and delivery structures, such as Public-Private Partnerships (P3), could help bridge the funding gap and/or be leveraged to finalize the project in a timelier and more cost-effective manner.
Central to its findings, the P3 analysis concluded that the Honolulu Rail Transit Project remains dependent on public funding to close the $2 billion funding gap, emphasizing the need for public authorities to make a timely decision on public funding sources for the project. Although the report did not present an opinion on different public funding sources, such as an extension of the General Excise Tax (GET) surcharge, it did note that delays in identifying the funding source could further delay the project, potentially costing the taxpayers of Hawaii close to $114 million per year.
The assessment notes that P3 cannot address the funding gap, however, citing a number of similar infrastructure projects both nationally and internationally, it highlights that alternative delivery structures such as a P3 could potentially accelerate project delivery, eliminate costly delays due to the funding shortfall and provide better budget predictability for completion of the City Center rail segment and Pearl Highlands Transit Center.
In pursuit of these objectives, JLL evaluated a number of delivery models including a design-build-finance (DBF) model, which could result in potential taxpayer benefits including:
- Negotiation of a single, fixed amount for the remaining, uncontracted portions of the rail project to be paid only when the project is complete;
- Vast majority of risks associated with cost overruns transferred from HART to the DBF private partner;
- Opportunity to potentially save about 15 percent in costs vs. the current process;
- Potential to accelerate the development timeline.
“Due to the at-risk private capital, Public-Private Partnerships often result in lower costs, less risk, and faster delivery; but it’s important to note they do not offer free money, so there still has to be a dedicated funding source available for the project,” said Murray Clay, managing partner at Ulupono Initiative. “We at Ulupono Initiative believe rail is a good thing for a Hawaii because it supports electrification of ground transportation and contributes to our mission focus of decreasing dependence on imported fossil fuels.”
Along with an investment by Ulupono Initiative, the P3 Viability Assessment for the Honolulu Rail Transit Project was funded in part by the Oahu Economic Development Board.
About Ulupono Initiative
Ulupono Initiative LLC is a for-profit, impact investment firm that strives to improve the quality of life for the people of Hawaii by working toward solutions that create more locally grown food, increase clean renewable energy and reduce waste. For more information about Ulupono Initiative, please visit www.ulupono.com or follow @ulupono on Twitter.