How Rail Could Make Honolulu Less Sustainable By Wendell Cox Kapolei Town Meeting 28 February 2012 East Kapolei Rail Station Site
The Broader Context: The New Realities Downtown
Fiscal Realities BUDGET DEFICITS AS A % OF GDP (2011) Greece 8.5% United States 10.8%
Birmingham, Alabama: 2011 Jefferson County Bankruptcy Sewer System Debt
Honolulu The Situation
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
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 0 20 40 60 80 100 120 140
Billions $70 Worst Downturn Since the Depression HOUSEHOLD WEALTH: 1955 2011: IN TRILLIONS $60 $50 $40 $30 $20 $10 $0 1960 1970 1980 1990 2000 2010
Median Multiple International Housing Affordability HONOLULU: MOST EXPENSIVE US/NEAR 3X AVERAGE 14 12 10 8 6 4 Honolulu Most Expensive in US Median House Price Divided by Median Household Income UNITED STATES METROPOLITAN AVERAGE 2 0
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 0-1,000,000-2,000,000-3,000,000-4,000,000-5,000,000 Domestic Migration: 2000-2009 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00 6.50 7.00 7.50 More Expensive Metropolitan Areas Less Expensive Metropolitan Areas Housing Affordability: Median Value Multiple: 2007
Net Domestic Migration Domestic Migration: 2000-2009 LARGE LOSSES IN HONOLULU 40,000 30,000 20,000 10,000 0-10,000 Honoulu Balance of State Other 49 States -20,000-30,000-40,000-50,000-60,000
Extra Time in Peak Hour Traffic Excess Time in Peak Hour Traffic HONOLULU WORST IN NATION 2007 50% 45% 40% 35% 47% 44% 30% 25% 20% 15% 10% 5% 32% 31% 0% Honoulu Los Angeles Bridgeport Township
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%
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
Honolulu Financial Challenges for Taxpayers
Billions Unfunded Government Pension Liability STATE & LOCAL: 2000 2010: IN BILLIONS $8 $7 $6 $5 Unfunded Liability In Billions $4 $3 $2 $1 $0 2000 2001 2002 2003 2004 2005 2006 2007 2006 2009 2010
Unfunded Government Pension Liability PER HOUSEHOLD IN HAWAII: 2000 2010 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$6,000 Unfunded City Retiree Health Liability PER HOUSEHOLD: 2007 2010 (OPEB) $5,000 $4,000 $3,000 $2,000 $1,000 $0 2007 2010
Increase in Liability/Honolulu Household PUBLIC EMPLOYEE RETIREMENT FUNDS 2007 2010 $6,000 $5,000 Retiree Health Benefits $4,000 $3,000 Pensions $2,000 $1,000 $0
Demographic Time Bomb AGE 65 & OVER PER 100 WORKING AGE x
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."
Financing Rail: Taxpayers Pay for Rosy Projections Prime Agricultural Land: Adjacent to Rail: East Kapolei
Average Rail Cost Overrun 45% Up to 100% 9 of 10 Cases
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
Paris 1890s Honolulu Warning Signs EXCESSIVE DEBT LEVELS -FTA -STATE
Paris 1890s Honolulu Warning Signs RAIL
Paris 1890s Honolulu Warning Signs ROSY GET TAX REVENUE PROJECTION -STATE
Paris 1890s Honolulu Warning Signs ROSY RIDERSHIP PROJECTION -STATE
Paris 1890s Honolulu Warning Signs ROSY OPERATING COST PROJECTION -FTA
Paris 1890s Honolulu Warning Signs CONSTRUCTION COSTS COULD BE MUCH HIGHER
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.
HONOLULU RAIL ALREADY THE HIGHEST RAIL COST PER HOUSEHOLD IN THE NATION
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
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%
Daily Person Trips HONOLULU S WORLD CLASS TRAFFIC Will only get worse 4.0 3.0 2.0 1.0 0.0 2007 2035
Share by Auto & Transit Work Trip Travel 60 Minutes & Over SHARE OF AUTO & TRANSIT TRAVEL: 2010 40% 35% Auto Transit 30% 25% 20% 15% 10% 5% 0% Honolulu Denver National
Number of Jobs Jobs: Downtown & Elsewhere 2007 & 2035: 2035 ORTP 800,000 700,000 Elsewhere Downtown 600,000 500,000 400,000 300,000 200,000 100,000 0 2007 2035
Share of Jobs in Metropolitan Area Share of Jobs Accessible by Transit HONOLULU 2008 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Transit Car & Telecommute 30 Minutes 45 Minutes
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?