HART Meeting Tomorrow: More Broken Promises and Lack of Transparency

The Honolulu Authority for Rapid Transit (HART) board of directors will meet at 8 a.m. tomorrow, and there are several things we should all be concerned about:

• a resolution requesting that the Honolulu City Council approve a bond float for the much-talked-about $44 million for HART marketing and personnel costs;

• the potential that the board “may” go into Executive Session regarding several issues that should be discussed in public; and

• the lack of a discussion item regarding the state auditor’s concern about HART management recording employees during interviews.

When I read the agenda, I was shocked to see a resolution requesting that the Honolulu City Council approve the issuance of bonds to cover the $44 million. This $44 million was initially put into the city’s capital improvement (CIP) budget by the mayor and then moved to HART’s CIP budget by the council.

During two months of budget discussions, we were told several times that HART had the money to pay these costs. We were reassured that no bonds would be needed for next fiscal year. Even as recently as the June 6 full council meeting, the $44 million was referred to as just “a placeholder,” similar to having a line of credit available.

Who knew that this was not correct? When did they know it? When will we be given accurate and complete information?

It’s also important to note that this resolution calls for the $44 million to be repaid with city funds, which breaks another promise that was made to us with respect to the rail project, i.e., that no city money (read “real property taxes”) would be used for rail construction.

If that isn’t enough for people to be concerned about rail finances, the HART board may go into “Executive Session” on five items including approval of the budgets that the council just passed, the bond approval requests (there’s another one for $450 million), a change order and the discussion on public-private partnerships. (This last one is a biggie, because it will cover the City Center Guideway and Stations – the last major piece of the rail project to be contracted.) All of these issues should be discussed in the open. Executive sessions are closed to the public, however.

What are they trying to hide? Have costs gone up yet again?

And finally, it’s notable that there is no discussion slated regarding management’s policy of recording employees during state audit interviews. During the last HART board meeting, Les Kondo, the state auditor, expressed serious concerns about this practice and asked that it be stopped. A former state attorney general has said it is illegal to record employees in this manner, and at least two board members had questions about the issue. No discussion took place, because corporation counsel stated it wasn’t allowed due to sunshine law restrictions. (Thank you to Tom Yamachika for the reminder that the board could have voted to sunshine the item onto the agenda.) Most employees will likely not feel free to openly discuss their concerns in this type of environment, yet there appears to be no follow up by the board.

I agree with HART board member John Henry Felix -– it’s time for a “forensic audit.” We cannot afford to continue the way we have.

The HART board meeting will be broadcast live on Olelo 53.

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A Sneaky Way to Approve City Funds for Rail

 

Buried in a proposed amendment to the bill for HART’s capital improvement budget (Bill 22, CD2, FD1) is the statement:

 

“Notwithstanding the provisions of Ordinance 07-001, City revenues may be used to pay for the debt service for the $44 million appropriated from the general improvement bond fund.”

 

We were told no city funds would be used to pay for rail.  Last year, however, the state legislature passed Act 1, which prohibits the general excise tax surcharge from being used to pay HART’s administrative or marketing costs, including personnel costs.  By default, that means that the bulk of these costs will need to be paid by city funds. Councilmembers then started discussions on Bill 42, which added “city” to the list of funding sources for rail.  It was opposed by most testifiers, and no final decision was made on it.

 

The mayor put $44 million of HART administrative and marketing costs into the city capital improvement (CIP) budget for next fiscal year.  Several councilmembers decried this as bad policy but then merely moved those costs to HART’s CIP budget.  

 

When asked about the $44 million, HART representatives stated they had enough cash to pay it, but according to their cash flow projections, bonds would be floated and apparently used to pay a significant portion of it.  There was no additional discussion of how the $44 million would be funded.

 

We deserve an open discussion of how and when city funds will be used to pay for rail and what councilmembers’ plans are to cover the $44 million.

 

As a side note, it is also important to consider that no significant cuts to HART’s administrative or marketing costs have been made.

 

There is one final hearing on this bill Wednesday. I will be there to oppose this bill and the manner in which the amendment is being done. I encourage others to testify as well.  The agenda and instructions on providing testimony are available here.

 

Open Letter to Residents and Taxpayers of Oahu

Aloha!

You may be aware I am running for Honolulu City Council District 4. I’ve been active in the community for about 15 years and have testified at city council for about as long.  I decided to run, because I believe we must improve the way government is run and our tax dollars are spent.

Several key issues facing Honolulu residents and taxpayers are interrelated – homelessness, affordable housing, infrastructure and rail. As we’ve seen over the past month or so, rail has started impacting city services and these key issues.  Recent budget amendments include:

  • Slashing the Department of Land Management to only two people. The department manages the city’s affordable rentals program as well as all city-owned land. At the current level of funding, the department cannot meet its mandated responsibilities under the city charter;
  • Cutting millions from the Department of Environmental Services, including wastewater treatment and disposal costs for maintenance programs;
  • Cutting the Department of Information Technology’s equipment budget in half. The director testified that the equipment is needed in order to avoid shut down of the city’s entire communications system.

We have been told these cuts were necessary in order to be able to meet FTA requirements to include $44 million (two years) of operating costs for the Honolulu Authority for Rapid Transit (HART) in the city budget. Out of HART’s ~$22 million operating budget, a mere $446,000 was cut, and those funds are likely to be restored during the next budget committee meeting.

In addition, if the full $44 million is included in the operating budget, it would needlessly tie up the $22 million that is for next fiscal year.

The city has options other than cutting these important areas. For example, amounts for FICA, a payroll tax, are routinely over-budgeted.  In addition, our entire real property tax system should be reviewed and updated to be fairer and more efficient and to make sure all taxpayers are paying what they should.  As a CPA and certified fraud examiner, I have the skill and experience to analyze the numbers and make smart decisions about them.

These are some of the concerns I have, but I’d like to hear what’s on your mind.  Please share your thoughts below (where it says “Leave a Reply”) or visit www.NatalieIwasa.com.  Note comments are moderated.

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.

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.