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Officials with the city’s struggling rail project are waiting for city council to decide whether or not to impose a new hotel tax that could benefit the Honolulu Authority for Rapid Transit, but don’t expect that. it is filling their $ 3.5 billion deficit – and has no other hopes. external financing.
Natalie Iwasa, HART Board Member, Certified Public Accountant and Certified Fraud Examiner, asked on Thursday how reliant HART officials were on securing funds from a transitional accommodation tax in Honolulu up to 3%, currently assessed by city council.
âTaxpayers have been advised that there will be no mortgage – in quotes – with respect to railway construction,â Iwasa said. “I don’t think that could realistically come from the county-level TAT, unless we’re talking about coming out 40 years or so.”
Rick Keene, Deputy Executive Director and COO of HART, responded:
âYou are absolutely right. We agree. We never claimed that we thought we could fill this gap. No. 1, we can’t fill it with extra funding from anywhere. We won’t go not getting $ 3.5 billion in additional funding and, most importantly, we’re not going to get it from TAT. We all knew that and that’s not the goal. We’ve worked really hard over the past six years. months to do things to try to narrow that funding gap. â
Bill 40 would levy a 3% temporary accommodation tax on visitor accommodation, in addition to the state’s current 10.25% tourist tax. Last week, the measure passed first reading by city council and was assigned to the council’s budget committee.
Keene said the HART administration and HART board chair Colleen Hanabusa hope the current funding gap estimated at $ 3.5 billion will be lower than currently projected.
âThis funding gap happened in March⦠and we said we were very careful,â Keene said. “We wanted to be transparent and talk to the public about what we thought was, hopefully, the worst-case scenario.”
HART officials are awaiting a draft report on their financial situation by an outside consultant, due Nov. 1, which will be used as part of a new financial plan and eventually forwarded to the Federal Transit Administration. FTA officials told HART not to submit an updated financial plan until city council decides what to do with Bill 40, Keene said.
Although the current bill creates specific allowances for the city’s TAT âârevenues, it does not specify how much would go to each proposed fund. Revenues would flow into the city’s general fund as well as funds intended to mitigate the effects of tourism on public facilities and transportation matters.
Iwasa suggested that an accurate estimate of HART’s finances would be useful for deliberations on Bill 40 âso that city council makes a good decisionâ.
Keene called the timing of HART’s draft report on his finances – as Council deliberates how Bill 40 should proceed – a “chicken and egg thing,” noting that he hopes the deficit $ 3.5 billion will be verified to be actually smaller.
âWe’ve worked really hard over the past six months to do things to try to narrow that funding gap,â Keene said. “We don’t have a validation on that yet, so we don’t want to go public and say, ‘Here’s the new number,’ without having a high level of confidence in that, so that’s what we’re trying to do. to do . “
An update on HART’s financial situation – based on what city council decides and verification by its consultant – is expected to be ready in March or April. âWe understand this is a key element. It’s a key element for the Council, it’s a key element for you guys. And it is very important for us in the management of the project.
The plan is to run trains along a 21-station, 20.2-mile route between East Kapolei and Ala Moana Center, Hawaii’s busiest transit hub. The project is currently budgeted at $ 12.499 billion and is not expected to be completed until March 2031. The budget faces a current deficit of around $ 3.5 billion, with no simple plan to close the gap and no supply of funds. financial aid.
HART’s board of directors passed a resolution at a meeting in late September asking the board to implement a municipal hotel tax, with part of TAT’s revenue going to the rail project.
The board’s proposal follows a measure passed by the legislature this year that ended sharing of part of the state’s TAT ââwith counties in Hawaii, but allows them to recover lost funds. by implementing their own TAT up to 3%. Previously, the state alone imposed a 10.25% TAT and distributed a portion of the revenue – limited to $ 103 million per year – to counties. Honolulu received 44%, or about $ 45 million.
According to the state’s calculations, if Oahu levied its own 3% TAT, it would generate around $ 48 million per year.
Even though the rail project is only 4 miles from reaching its intended destination at Ala Moana Center, some political leaders and even a former HART board member have called for construction to end somewhere in the center. -city.
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