Charter Amendment #4 on Rail – What’s Not in the Booklet

Voters should have received the 2016 Charter Amendments booklet this week.  There are 20 amendments for voters to read through and decipher.  Question 4 deals with the rail project and deserves much more discussion.

This ballot question is largely the result of a proposal submitted relatively late in the process.  During Honolulu Charter Commission meetings it was mentioned the charter amendment that created HART didn’t adequately consider how rail operations and maintenance (O&M) would work (or not) with TheBus and HandiVan, which are under the Honolulu Department of Transportation Services (DTS).

In addition, certain members of the HART board felt oversight of staff was too limited.  The proposal does make it clear the board sets the policies for the development of the rail system.

It would have been better to have a separate question regarding board powers, but the commission decided to combine these issues into this one question.

The question contains three parts:  1) replace the current Transportation Commission with a Rate Commission;  2) put rail O&M under DTS; and 3) clarify and increase the HART board responsibilities and authority.

Duties of a new Rate Commission would include creation of new sources of revenues.  The commission would also be authorized to collect and report transit data.  Discussions of this proposal did not address the issue of how riders’ personal information would be handled.

While it makes sense to have the rail fare system and route scheduling under the same agency as TheBus, we need to be careful how a transition between HART and DTS would be done.  In this case, everyone (employees, contractors and even vacant positions) who has primary responsibilities related to O&M would transfer to DTS on July 1, 2017.

Those transferred “shall suffer no loss of vacation allowance, sick leave, service credits, retirement benefits or other rights and privileges because of the transfer.”  So basically DTS will inherit HART’s liabilities without the capability of making any near-term changes.

Who are these people, specifically?  How much will this change cost?

With O&M out of the way, what shortcuts will be taken on the rest of the development of rail to meet budget and completion deadlines?  How much will this end up costing us more in the long run?

And how much consideration would DTS give to the quality of work prior to acceptance of the “completed” rail with pressures to simply get it going?

These questions should be answered before this amendment is passed.  Since the Honolulu City Council may introduce charter amendments for the next election, I urge everyone to vote “no” on this.

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Honolulu Charter Commission Works on Wording for Proposed Amendments

As election season heats up, a group of people continue their work putting together potential amendments to the Revised Charter of Honolulu. On November 8, registered voters will have an opportunity to vote on proposals such as creation of new city departments, increased term limits and revisions to the rail project, among other issues.

At its July 13 meeting, the Honolulu Charter Commission, narrowed down the list of proposed amendments to 27.  All 27 will likely be on the ballot in some manner. Some may be combined. Due to tight deadlines, no significant amendments will be made to these proposals.

The Committee on Submission and Information is currently working on the wording that will be used for each question as well as educational materials for the public. The public will have an opportunity to provide input on these descriptions (in draft form) 10 a.m. Monday, when the committee comes back from a weekend recess and again 3:30 p.m. Friday, when the full commission meets.

Final wording for the 27 proposals is available on the commission’s website. Some of these require significant changes to city management, so it’s important that voters become familiar with them.

For example, proposal 76A transfers operations and maintenance of the rail project from HART to the Honolulu Department of Transportation Services (DTS), replaces the transportation commission with a new fare commission, and “clarifies” the role of the HART board.

It makes sense to have TheBus, HandiVan and rail under one umbrella, but this proposal also allows DTS to create new sources of revenue (Sec. 6-1703(g)), collect data (Sec. 6-1703(g)(5)) and accept gifts. We should look at these authorizations carefully.

A much-needed change under C-1 would allow the police commission to terminate or suspend the chief of police. The need for this change has become apparent within the past year. Regardless of current affairs, however, this is good policy.

Proposal C-7 revises the grants-in-aid fund by requiring it to be the sole source of funds for city grants (excluding federal, state and affordable housing grants). This will cut down on line-itemed grants, such as the half million dollars that was recently appropriated to Kosong Foundation, an organization that is not in compliance with state law, according to the state attorney general’s website. This amendment would put all nonprofits on equal footing and force them to go through the city’s compliance checklist and vetting process.

Others I think should pass are:

  • #23 – to conform the county public records law to state law;
  • #29 – to allow the prosecuting attorney’s office some autonomy with respect to its budget. (The Honolulu Ethics Commission should also be allowed this autonomy); and
  • #78 – allows the mayor to create special funds with the council’s approval.

Several that I think should not pass are:

  • #35 – deletes the requirement that no more than a majority of the reapportionment commission members shall be from the same political party;
  • #44 – would change term limits from two to three, i.e., allow for 12 consecutive years, for the mayor and councilmembers. It would also create term limits for the prosecuting attorney; and
  • #C-3 – would create a new fund for the zoo and mandate that .5% of the city’s real property taxes be used only for the zoo. (I support the zoo, but special funds like this are bad fiscal policy.)

Keeping up with the commission and the many changes that several proposals have gone through has been challenging. It should be noted I have not read every single proposal, and just because one hasn’t been mentioned does not mean it’s not important.

I encourage voters, residents and taxpayers to carefully review each proposal and continue to provide input to the charter commission. The wording on the ballot is at least as important as the wording of the underlying proposal.

 

Rail, TheBus and HandiVan Operations – Under HART or the Mayor?

One question that is almost guaranteed to be on the ballot this fall is whether the operations for rail, TheBus and HandiVan should be under one agency. It makes sense to have all operations and maintenance (O&M) functions combined from an economic as well as public transit standpoint.

As currently written, however, the charter authorizes HART to make decisions regarding rail ticket prices and schedules, while TheBus and HandiVan decisions are made by the city administration, with Honolulu City Council approval for certain decisions. It’s vital that schedules and fares be coordinated.

In order to determine the best structure, perhaps it would be easiest to start with what it shouldn’t be. We know having rail under the city’s Department of Transportation Services didn’t work. That’s why we now have HART. But HART isn’t working well either.

How about a separate entity with a different structure?

During the Honolulu Charter Commission’s last meeting, there was a good discussion about our current semi-autonomous agencies — HART and the Board of Water Supply. The main difference between the two is that HART is unable to generate enough revenue to be self sustaining. In fact, estimates of taxpayer subsidies are anywhere from 62% to 70% according to the Full Funding Grant Agreement.

Commissioners seemed to agree that fact alone means that a “semi-autonomous” agency is not the best option. Given that taxpayers will subsidize such a large part of the O&M, a political process is necessary, and that includes public input, transparency and accountability.

We’re left then some kind of board or commission under the mayor or HART. A number of proposals were introduced that suggest a merger of operations, and Commissioner Soon did quite a lot of research on other governance models. The models are as varied as the cities, but given our experience here, I think the best option is an elected board that is subject to sunshine laws, under the mayor with policy decisions made by the council. This would allow for greater accountability and transparency that is so sorely lacking under our current set up.

Other considerations include the Ansaldo contract and how it would be transferred, integrity of bus and van operations, so their funding is not “cannibalized” by rail, and coordination of any other contracts.

The commission has formed a group to discuss this issue further and will make recommendations for a vote at a future meeting. Their next meetings are set for March 17. Agendas and proposals are available on the commission’s website at http://honoluluchartercommission.org/.

As always, your comments are welcome here and by the commission at cclcharter@honolulu.gov.

HART Proposals to be Discussed Friday

On Friday afternoon the Honolulu Charter Commission will meet to discuss a dozen proposals related to the Honolulu Authority for Rapid Transit (HART). Let’s take a closer look.

Merging Rail, Bus and HandiVan

The following proposals would put the three modes of transportation under one agency:

  • #10 would terminate HART and put rail construction back under the mayor and city council;
  • #14 would create a single transit agency for bus, rail and HandiVan;
  • #47 would also create a single entity for transportation operations and maintenance with a transportation board that includes at least three members who have expertise in transportation operations and/or public finance;
  • #76 would remove operations and maintenance from HART and the Department of Transportation Services and create new public transit entity; and
  • #92 is a HART proposal and would create one agency for operations and maintenance.

Putting rail, bus and HandiVan under one agency makes sense, but we’ve seen that doesn’t work well under the mayor. Our current set up with HART also does not work. The Commission is sure to spend a lot of time discussing these options, but it seems the best solution is something in the middle, e.g., operations and maintenance under the mayor with some kind of board making key recommendations and the council making policy decisions and funding approvals.

Other HART-Initiated proposals

  • #93 would establish a transition committee that would make recommendations such as the best structure for a unified transit authority, how the charter should be amended to reflect mayor/council approval over the transit authority’s budgets, set qualifications and approve actual amendments for 2016;
  • #94 would allow HART to use other funds the Council may authorize for funding rail and would remove the operating budget from the Charter (and therefore the approval requirement by the Council); and
  • #95 would allow HART to issue any kind of bonds.

Based on what I’ve seen at HART and Council meetings, it would not be a good idea to remove the operating budget from the Charter nor allow HART to issue any kind of bonds without approval from the Council. Proposal 93 would potentially give too much control to a new transit authority.

Remaining proposals for Friday include:

  • #13 would require HART members to have certain experience and knowledge and ride rail once per week on average;
  • #45 would set a due date of not less than 120 days prior to the end of fiscal year for the mayor to turn the budgets in to the Council: and
  • #140 would create an independent review board to look at 5-, 10-, 15- and 20-year financial projections, especially considering obligations created by the rail project.

Proposal 140 certainly has a lot of merit and could potentially be done via ordinance.

Lastly, let’s take a moment to remember the proposals that the Commission “deferred” back in December.

Three proposals, 71, 139 and 146, would either eliminate HART (and rail) or shorten the rail project. One commissioner stated that the Commission shouldn’t be a “cheap route for referendum” on rail. Another commissioner stated that if voters did support one of the proposals, the city would be in breach of the contract with the Federal Transit Administration.

First of all, it appears very likely we will be in breach of the Full Funding Grant Agreement anyway, because the rail is not coming in on time. Second, voters approved steel-wheel-on-steel rail by a slim margin and allowed the creation of HART, because it was seen as a way to “take politics out” of it. I believe we should have the opportunity to vote on rail again, especially given the misinformation and lack of transparency we have experienced.

The Commission’s meeting will be held at 4:30 p.m. Friday in the Honolulu Hale committee room on the second floor. They will also hold their budget meeting at 3:30 p.m. Agendas and proposals are available at http://www.honoluluchartercommission.org/, and testimony and comments may be submitted to cclcharter@honolulu.gov. Make sure your voice is heard.

HART Errors – Lack of Acknowledgement is Troublesome

Last week I wrote about errors and inconsistencies I’ve found related to the Honolulu rail project. Councilmember Ozawa apparently followed up with HART regarding one of those errors – the West Oahu Farrington Highway summary change orders calculation. HART responded via a letter dated February 3, 2016.

I do not know specifically what Ozawa requested (his communication to HART is not posted on the council’s website).  I do know, however, that HART did not address the issue of the error.

We all make mistakes. Shouldn’t agencies like HART at least acknowledge that an error was made?  Wouldn’t it be a lot easier than clouding the issue with explanations that may be correct but don’t address the concerns?

I’ve taken the liberty of showing the change order calculation (suggested presentation) as it would be if HART had included the credit and the full administrative costs from its detailed spreadsheets. Using this presentation, we can see how much rounding is included in the approved change order.

How many other errors have been summarily dismissed by HART? How much are we losing out because of this? I don’t know the answers to these questions, but I will continue to press for transparency and accountability.

 

Rail’s Numbers – A Pattern of Errors and Inconsistencies

The HART board formally accepted the audit of their June 30, 2015, financial statements at its meeting January 28. During that meeting, I mentioned that their note on “Liquidity Risk” included a statement that the federal government “may” require the return of federal funds if there is a breach of the grant agreement and that this is inconsistent with statements HART has been making.

HART chair Don Horner then made a point of asking the auditors whether they had found any “pattern of errors,” “inconsistencies” or “sloppy information.” The auditors said “no.” But what Horner failed to point out is that the errors and inconsistencies that I’ve found are beyond the auditors’ scope of work.

The reports that contain these errors have been used by legislators and councilmembers when making decisions related to rail, and I think it’s important we understand just how pervasive this problem is.

Here are the errors, with more detailed information below:

Accrual Basis Mixed with Cash Basis

The legislature had good questions for HART last year when they were discussing the extension of the general excise surcharge tax. One report that HART provided in response was “Revenues from January 1, 2007 to December 31, 2014.” The report shows a mixture of accrual basis and cash basis numbers for revenue. For people who are unfamiliar with these concepts, an analogy would be creating a table of temperatures with some listed as Celsius and others as Fahrenheit. It doesn’t make sense and just isn’t done.

Incorrect Revenues and Inconsistent Expenditures

The revenues report led me to HART’s monthly “Planned vs. Received Project Funding” figure, which is included in HART’s progress reports and the monthly ad that is published in the Honolulu Star-Advertiser. This report double counts $298 million of revenue. This is not an obvious error but had been repeated many months (possibly years – I didn’t go back to check) until it was finally corrected in the August 2015 PMOC report.

HART provided a number of reports to the Honolulu City Council in response to questions about the surcharge tax extension.  Table A-1, “Capital Plan Cash Flows @ 4% GET Surcharge Growth Rate” projects“All Other” revenue to be only $6 million, but as of the date it was given to council, other revenue had already exceeded $9 million. This is the table that Chair Martin based his amendment on for the floor draft to Bill 23 (the surcharge extension) that went to the mayor for his signature.

Table A-1 also shows expenditures to date (June 30, 2015) of $1,512 million, while the “Quarterly Cash and County Surcharge Revenue Report as of June 30, 2015” shows total expenditures of $1,637 million. HART’s monthly “FACTS” ad shows the expenditures at yet another amount — $1,581 million. No one on the council asked HART in a public setting why these numbers don’t match. No one from HART provided me with an explanation.

Other Types of Errors

Mayor Caldwell has stated he prefers the surcharge tax, because 33% to 38% of the tax is paid by visitors and offshore military. The amount is actually less than 20%.  Additional information on this was provided by me to the city council October 21, 2015.

When Ann Kobayashi asked HART for their ridership plan, they gave the council a table with columns of numbers that didn’t add up. Even the “Raw Data” from which the table came from had math errors.

When the city council was discussing authorization for HART to issue bonds backed by the City and County of Honolulu, HART provided the council with a cash flow projection that included a $140 million math error. This document is now part of our city law in Resolution 15-7.

HART’s updated “Project Balance” as of October 15, 2015, was confusing at best and also included a math error. Here’s my suggested presentation of that same information.

The most recent error I found was related to the $26 million change order for the West Oahu Farrington Highway Guideway. HART did not include a credit of about $5,000. However, they did round up administrative costs, so that the net impact was about $2,000 . . . in the contractor’s favor.

Update:  there was one more slide related to the WOFH change order that had an error.  The total was off by $4,000 and was presented to the HART board at its December meeting.

These are just the errors that I’ve noticed. HART produces many other numbers for decision making and “public consumption.” Isn’t it time that they were accurate, complete and consistent?