How Rail Could Make Honolulu Less Sustainable

Transcription

1 How Rail Could Make Honolulu Less Sustainable By Wendell Cox Kapolei Town Meeting 28 February 2012 East Kapolei Rail Station Site

2 The Broader Context: The New Realities Downtown

3 Fiscal Realities BUDGET DEFICITS AS A % OF GDP (2011) Greece 8.5% United States 10.8%

4 Birmingham, Alabama: 2011 Jefferson County Bankruptcy Sewer System Debt

5 Honolulu The Situation

6 Alabama Tennessee South Carolina Idaho Mississippi South Dakota Utah Kentucky Missouri Arkansas Arizona Oregon Georgia Oklahoma North Carolina New Mexico West Virginia Texas Montana Michigan Florida Indiana Colorado Nevada New Hampshire Ohio Louisiana Iowa Virginia Delaware Washington Kansas Nebraska Pennsylvania Maine Wisconsin Illinois Rhode Island Minnesota California Vermont Maryland Hawaii Massachusetts North Dakota New Jersey Connecticut New York Wyoming Alaska State & Local Taxes per Capita 2009: HAWAII 8 TH HIGHEST $0 $2,000 $4,000 $6,000 $8,000 $10,000

7 Cost of Living: MSA s Over 900,000 HONOLULU: 5 TH MOST EXPENSIVE IN 2009 Bridgeport San Jose San Francisco US Bureau of Economic Analysis Data New York Honolulu Los Angeles Washington San Diego Boston Philadelphia Cincinnati St. Louis #10 #53 #59 UNITED STATES AVERAGE

8 Billions $70 Worst Downturn Since the Depression HOUSEHOLD WEALTH: : IN TRILLIONS $60 $50 $40 $30 $20 $10 $

9 Median Multiple International Housing Affordability HONOLULU: MOST EXPENSIVE US/NEAR 3X AVERAGE Honolulu Most Expensive in US Median House Price Divided by Median Household Income UNITED STATES METROPOLITAN AVERAGE 2 0

10 Net Domestic Migration: Population People are Leaving Unaffordable Areas BY METROPOLITAN AREA HOUSING AFFORDABILITY 5,000,000 4,000,000 3,000,000 2,000,000 1,000, ,000,000-2,000,000-3,000,000-4,000,000-5,000,000 Domestic Migration: More Expensive Metropolitan Areas Less Expensive Metropolitan Areas Housing Affordability: Median Value Multiple: 2007

11 Net Domestic Migration Domestic Migration: LARGE LOSSES IN HONOLULU 40,000 30,000 20,000 10, ,000 Honoulu Balance of State Other 49 States -20,000-30,000-40,000-50,000-60,000

12 Extra Time in Peak Hour Traffic Excess Time in Peak Hour Traffic HONOLULU WORST IN NATION % 45% 40% 35% 47% 44% 30% 25% 20% 15% 10% 5% 32% 31% 0% Honoulu Los Angeles Bridgeport Township

13 Los Angeles Utrecht Manchester Paris Arnhem Trier Derry Brussells Amsterdam Antwerpen Nottingham Newcastle Belfast The Hague Honolulu Liverpool Wuppertal Köln Stuttgart Rotterdam Aberdeen Mainz London Wiesbaden Birmingham Excess Peak Hour Traffic Delay 16 TH MOST CONGESTED: 200 US & EUROPEAN CITIES Worst 25 San Francisco is 28 0% 5% 10% 15% 20% 25% 30% 35%

14 Democratization of Prosperity ASSOCIATION BETWEEN MOBILITY & AFFLUENCE HARTGEN-FIELDS Mobility Improves Productivity Chicago Reduced Minority Unemployment With Cars U. of California PRUD HOMME Mobility Improves Productivity U. Of Paris Cars for low-income households improves job access Progressive Policy Institute

15 Honolulu Financial Challenges for Taxpayers

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17 Billions Unfunded Government Pension Liability STATE & LOCAL: : IN BILLIONS $8 $7 $6 $5 Unfunded Liability In Billions $4 $3 $2 $1 $

18 Unfunded Government Pension Liability PER HOUSEHOLD IN HAWAII: $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $

19 $6,000 Unfunded City Retiree Health Liability PER HOUSEHOLD: (OPEB) $5,000 $4,000 $3,000 $2,000 $1,000 $

20 Increase in Liability/Honolulu Household PUBLIC EMPLOYEE RETIREMENT FUNDS $6,000 $5,000 Retiree Health Benefits $4,000 $3,000 Pensions $2,000 $1,000 $0

21 Demographic Time Bomb AGE 65 & OVER PER 100 WORKING AGE x

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23 Rocinda Favela Rio de Janeiro EXPENSIVE BUT NECESSARY "Providing full secondary treatment at Sand Island and Honouliuli wastewater treatment plants will drive monthly residential sewer fees as high as $300 in less than 20 years."

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26 Financing Rail: Taxpayers Pay for Rosy Projections Prime Agricultural Land: Adjacent to Rail: East Kapolei

27 Average Rail Cost Overrun 45% Up to 100% 9 of 10 Cases

28 Las Vegas Monorail INDUSTRY FORECAST LEADS TO BANKRUPTCY Actual Ridership: 2007: 21,600 Investment Grade Industry Projection: 53,500 Our Projection: 21,200 Daily Ridership

29 Paris 1890s Honolulu Warning Signs EXCESSIVE DEBT LEVELS -FTA -STATE

30 Paris 1890s Honolulu Warning Signs RAIL

31 Paris 1890s Honolulu Warning Signs ROSY GET TAX REVENUE PROJECTION -STATE

32 Paris 1890s Honolulu Warning Signs ROSY RIDERSHIP PROJECTION -STATE

33 Paris 1890s Honolulu Warning Signs ROSY OPERATING COST PROJECTION -FTA

34 Paris 1890s Honolulu Warning Signs CONSTRUCTION COSTS COULD BE MUCH HIGHER

35 FTA Concerns: Full Funding Agreement FTA LETTER: DECEMBER 2011 Financial plan must be further strengthened before FTA will consider awarding an FFGA. Specifically, the financial plan states that additional revenues may be obtained from an extension of the General Excise Tax or implementation of value capture mechanisms. However, these revenue sources require actions by the State of Hawaii and/or the City that have not been taken and which are beyond HART's ability to control. Prior to the Project's consideration for an FFGA, HART should demonstrate the availability of additional revenue sources that could be tapped should unexpected events such as cost increases or funding shortfalls occur.

36 HONOLULU RAIL ALREADY THE HIGHEST RAIL COST PER HOUSEHOLD IN THE NATION

37 You Won t Know the Bill Until It s Too Late BIG DIG BOSTON S BIG DIG: PROMISE $4 BILLION, ACTUAL $22 BILLION Inflation Adjusted Costs

38 Washington Pre-Lehman Metro: Brothers Largest New Losses System CAR POOL RIDERS BY MARKET SWITCH, CLASSIFICATION NOT DRIVERS OR CARS Drivers 8% Honolulu at risk High Car Pool Rate Car Pool Passengers 92%

39 Daily Person Trips HONOLULU S WORLD CLASS TRAFFIC Will only get worse

40 Share by Auto & Transit Work Trip Travel 60 Minutes & Over SHARE OF AUTO & TRANSIT TRAVEL: % 35% Auto Transit 30% 25% 20% 15% 10% 5% 0% Honolulu Denver National

41 Number of Jobs Jobs: Downtown & Elsewhere 2007 & 2035: 2035 ORTP 800, ,000 Elsewhere Downtown 600, , , , , ,

42 Share of Jobs in Metropolitan Area Share of Jobs Accessible by Transit HONOLULU % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Transit Car & Telecommute 30 Minutes 45 Minutes

43 The Way Forward PRINCIPLES FOR THE NEW REALITY FINANCE REQUIRED PRIORITIES SUCH AS SEWER, WATER, PENSIONS AVOID SPENDING ON THINGS NOT NEEDED CONSIDER THE PURPOSE (SUCH AS RAIL) WHAT DIFFERENCE WILL IT MAKE IS IT WORTH THE RISK IN THE NEW REALITY?