The short answer: taxes.
[Update #1: a report from last night's community meeting, "Railing Against Honolulu's $6 Billion Rail Project" ("Honolulu Mayor Kirk Caldwell and his top transit official took their licks from a decidedly anti-rail crowd during a boisterous town hall meeting at Washington Middle School on Wednesday."
Update #2: "A Hawaii Senate committee passes a bill to extend the GET rail surcharge another give years, but makes clear the money should only be used to build the rail line" (4/8/2015, via Civil Beat).]
There's been a lot of breathless reporting over the past couple of weeks about the skyrocketing cost of the 20-mile, 21-station Honolulu rail project. Cost estimates to build the line from Ewa to Ala Moana Center started off in the range of $3.5 billion, but anyone who was paying attention knew this wasn't anywhere in the ballpark. Sure enough, over time, the figure kept moving upwards. Now we're at, what, $6.5 billion, more or less? And there's nothing to indicate this is the upper limit except more promises that this figure is the light at the end of the proverbial tunnel.
Several state legislators are even holding a community meeting tonight (Monday, March 30, 2015) to let the people vent, and HART and the Mayor are going to dutifully show up and take any public lumps that may be coming their way.
But will anything come of this and the other (and we're paraphrasing here) "we're shocked, we tell you, shocked!" reactions to the revelations that the rail is going to cost more to build and perhaps operate than originally promised?
We predict no, that this is mostly political theater designed to assuage the public, when there's virtually no chance the project will get derailed or even scaled back, whatever it eventually costs. So despite all of the present posturing and prostrating before the public by officials, make no mistake: it's now too late to do anything but pay for the thing. New York City Mayor Bloomberg accurately projected the attitude of public officials when it comes to marquee projects such as Brooklyn's Barclay Center, "Nobody's gonna remember how long it took. They're only gonna look and see that it was done."
Besides, construction of the rail is already underway, and we know what that means.
So is HART (I mean "we") going to pay whatever this thing costs to build, maintain, and operate? Short answer: yes --
- The Hawaii Legislature is reviewing whether to extend the "sunset" period for the extra General Excise Tax that we pay in the City and County of Honolulu. Our prediction: the Legislature will extend the tax. It has to. Maybe not as long as the city administration would like, but extend the GET increase it will, despite the noise being made. And the Legislature will keep on doing so until the project is paid for. Update: see Update #2 above.
- And how about the cost of running the thing, once built? A recent public meeting of HART's Transit-Oriented Development Committee revealed the preferred method to finance operation and maintenance (and it's no big secret): Tax Increment Financing. According to Wikipedia (which is, in this case, accurate), "TIF is a method to use future gains in taxes to subsidize current improvements, which are projected to create the conditions for gains above the routine yearly increases which often occur without the improvements." In other words, you pay for a project now by predicting that the project itself will raise property values in the future. HART is predicting -- mostly accurately, we think -- that property values along the rail corridor will rise as a result of rail being nearby. Whether they are within the City's contemplated "TOD" zone which will allow for more intensive and creative development than traditional zoning, or even outside of the TOD zones, where property values may increase due to the general gentrification that is predicted as a result of the rail. Bottom line: property taxes are likely going up. And the difference between what Honolulu property taxpayers pay now and what they will pay with the increased value -- the "tax increment" in "TIF" -- is what will pay for the rail.
This is what voters voted for, after all, when they, like Sgt. Deux Deux said "si" to the creation of HART (and the rail). From here forward, we all must say "oui."
