Rail Will Cost City At Least $69 Million Per Year To Operate

Feb 27, 2020

The City and County of Honolulu signed an agreement with Hitachi worth $918 million over 13 years to operate the long-delayed rail transit system.

That works out to about $69 million per year.

Honolulu Mayor Kirk Caldwell said that the contract represents “the bulk” of operations and maintenance expenses associated with the rail line, but also noted there will be additional costs.

“We know what the biggest portion is, but there are additional costs. Like with our bus system, we’ll have people overseeing our rail system and that is on top of the numbers we've given you,” Caldwell said at a press conference on Wednesday.

Expenses like electricity to power the train, security, and administrative oversight are not included in the Hitachi contract.

But Caldwell also pointed out that the $69 million does not include revenue generated by rider fares, which will offset some of the operations and maintenance costs. City officials said they do not expect the rail to make much money in its first years, when only partial service will be available.

The second-term mayor, who leaves office at the end of the year, pointed out that figure is only slightly above what it costs to operate the city’s Handi-Van service and well below the cost of Oahu’s bus network.

Caldwell said the $69 million per year (green column) is only slightly more than the cost of operating the Handi-Van (orange column) and significantly less than the cost of operating the island's bus system (blue column).

The rail contract does require Hitachi to cover ongoing maintenance and repairs of the rail system, a problem that has plagued similar systems in Washington, D.C. and New York.

New York State’s Metropolitan Transportation Authority, which oversees the New York City subway system, has underfunded maintenance for decades and is now facing a multi-billion dollar shortfall to address safety and reliability issues.

Mark Garrity, a former city transportation services director, was hired by the Caldwell administration to oversee the operation of the rail project and helped negotiate the Hitachi contract.

“They [Hitachi] are entirely responsible for maintaining and upkeeping all of the equipment and at the end of their contract they have to return that equipment back to us in good working condition” Garrity said.

The first leg of the rail line, which will provide service from Kapolei in West Oahu to Aloha Stadium, is scheduled to open at the end of this year.

Caldwell said he remains hopeful that the deadline will be met, but he cautioned that operations won’t begin until the project is deemed safe and fully integrated with bus service.

The Honolulu Authority for Rapid Transit, which is responsible for overseeing construction of the $9 billion project, says the projected completion date for full 20-mile system with service to the Ala Moana Shopping Center is 2025.