Hawaii Real Estate Daily

It might be hard to persuade anyone that there is a national housing meltdown when the Multiple Listing Service offers deals on Maui like this:

“Two bedroom, 1 bath older home on a small lot that is zoned industrial - access to property is by footpath only. Being sold as-is - fixer upper. $200,000.”

The aggregate statistics for the third-quarter of 2008 released by the Realtors Association of Maui on Thursday also do not portray a cratering housing market.

True, the number of transactions for the first nine months of the year is down by about one quarter, but prices received for houses and condominiums that do sell are holding up.

For single-family houses, the median price this year is $594,500. That is down $44,000 from last year, but is only a 7 percent decline, compared to hard-hit areas of the Mainland where prices are down 15 percent, 20 percent and in some neighborhoods much more.

Average prices for single-family properties are down by the same percentage, but since Maui’s average was so high last year, $945,000, the fall as measured in dollars is $70,000, down to $876,615.

Condos averaged $783,000 last year and are up 21 percent to $947,000 this year, but thousands of Maui condos are not in the million-dollar class.

The biggest concentration of middle-class condos is in Kihei, where the average is up 9 percent this year to $493,000.

The median for condo units, the point where half sold for more, half for less, is up 7 percent, to $570,000 countywide, although only 5 percent to $415,000 in Kihei.

The most expensive condos are in Wailea-Makena, averaging $2,184,013 this year, which is up an impressive 37 percent, but that may reflect the late recording of sales contracts that were inked for new construction years ago.

Still, there is little sign that the South Maui luxury condo market is swooning. The number closing this year is 160, only 16 fewer than in the first three quarters of 2007.

As a resort, Wailea is an outlier, commanding room rates almost a third higher than any other luxury resort in the state. It may be an outlier in luxury condominiums as well.

The average condo sales price in Kaanapali this year is off 18 percent to $1,164,364, and the average in Kapalua is down 30 percent to $1,070,794.

In Kaanapali, the number of closings has fallen from 45 to 33, and at Kapalua from 27 to 17.

Lanai is also a market unto itself, where there were only two transactions, but for nearly $2 million on average.

Although prices received are waffling around what sellers received last year (which was down from 2006), the smaller number of transactions means the aggregate value of the turnovers is well down.

The total of condo transactions this year (672 closings compared with 916 at this point last year) is down by $80 million to $637 million.

The number of single-family closings is down from 893 a year ago to 706, and the aggregate transactions are off $226 million to $619 million.

Notice that the number of single-family closings topped the number of condo closings. That is a dramatic change from any year before 2006. when the number of condo sales was often nearly double the number of single-family sales.

The number of days on market is also down sharply from last year. In 2007, it ranged between 74 and 131 for single-family and between 73 and 115 days for condos.

This year, the wait has been between 57 and 95 days for house sellers, 48 and 95 days for condo sellers.

Terry Tolman, the chief staff executive of the association, said that the drop in days on market shows that “properties priced right will sell in a reasonable time frame.”

He also noted that the number of active listings “has grown considerably in the last 12 months,” though the rise has leveled off recently.

Active condo listings this month are up to 1,600, compared with 1,283 in October 2007. Active single-family listings are 1,114, up from 1,016 a year before.

Tolman said median prices in September were down across the board, which might be because buyers are now not able to qualify for as much or because sellers are willing to accept lower offers.

Credits: Maui News

The state Board of Education passed one of the deepest budget cuts in recent memory after hearing last-ditch pleas to save school programs and positions from the chopping block.

Board members last night struggled to agree on a $46.5 million budget reduction plan that falls well short of the $69 million mandated by Gov. Linda Lingle.

Board Chairwoman Donna Ikeda warned last night that by sending the governor a budget reduction plan short of the mandate that the governor and the state Legislature could cut into the schools.

“If the governor decides to take the ($69 million) cut, the money is coming out of the schools,” Ikeda said.

“That is something I will fight against. It is something that is going to affect all students … and it will be devastating.”

The board voted 11-1 to approve a budget reduction plan that eliminates about 240 state and district positions, including physical therapists to resource teachers to speech pathologists. Included in the cuts was money for athletic supplies and equipment, alternative learning centers and science textbooks.

Following pleas from educators and students, the board also reinstated cuts to several programs for at-risk youth, the Peer Education Program and funding for the Pacific and Asian Affairs Council.

The earliest the cuts could take effect is July 1, 2009.

Before the vote, dozens of educators, students and others expressed discontent with proposed budget cuts that could affect everything from state resource teachers to special education, from public charter schools to high school athletics. It was the second round of such testimony this week.

As board members heard testimony, they asked those who were addressing the board to explain possible adverse impacts of the cut they are concerned about.

But board members made no promises, and said cuts must be made.

“Any cutting that takes place should be as far away from the classroom as possible,” Roger Takabayashi, head of the Hawai’i State Teachers Association, told board members.

While BOE members deliberated on the budget cuts in the McKinley High School auditorium late into the evening, they acknowledged that a decision needed to be made to meet today’s deadline set by Lingle.

Tight schedule

Board members have been working under a tight schedule, meeting in a committee hearing Monday that lasted some 7› hours. That was the first time the BOE had discussed the budget reduction plan that the state Department of Education first released on Sept. 24.

High school students made impassioned pleas to save the Peer Education Program, which operates in about 25 schools across the state.

In the end the board decided against cutting $1 million to eliminate the program, which teaches students to help other students deal with health and social problems. Instead, the board decided to only cut 10 percent of the funding for that program.

Mark Shimabukuro, the peer education coordinator at ‘Aiea High School, said peer education is vital to the health and safety of students. “Unfortunately, today’s kids are making more and more risky choices,” he told BOE members. “The first thing I tell students is this is the most powerful program you will be involved with. I tell them, the choices you make are going to determine the rest of your life.”

Board member Mary Cochran said that the peer education program could still be funded through each school’s individual “weighted student formula” funding. “Cuts have to be made, unfortunately,” Cochran said. “But really, the peer education program is one that should be saved.”

The last time the DOE was asked to reduce its budget was in the mid-1990s when the state faced a $350 million shortfall. In total, the DOE suffered $24 million in cuts.

The proposed cuts make up slightly less than $46.5 million. That’s 15 percent of the DOE’s discretionary budget, but well short of the $69 million in cuts for a worst-case-scenario budget plan that Lingle asked the DOE to create because of the state’s declining tax revenues.

Loss of 244 positions

The DOE budget reduction plan includes cuts of 244 positions in state and district offices, but largely preserves school-level programs and staff.

The cuts are part of a request by Lingle that all state agencies come up with 10 percent, 15 percent and 20 percent budget-cut scenarios for their 2009-11 discretionary budget because the slowing economy has eroded state tax revenue.

The DOE already had cut about $20 million from its budget, including a $10.2 million cut by lawmakers in this year’s Legislature. The BOE recently approved

$9.3 million in budget cuts to meet 4 percent across-the-board reductions imposed by Lingle.

Natasha Chapel, the high school program director of the Pacific and Asian Affairs Council, testified in support of the program, which helps about 1,500 students a year. The organization offers a wide spectrum of classes and programs, from those for at-risk youth to students seeking college preparation.

Chapel said if the DOE cuts its roughly $47,000 in funding that the program risks losing an additional $300,000 or so that it receives through private sources.

Included in the budget cuts is some $3 million for teacher recruitment and retention programs. The cut would affect about 36 resource teachers who administer programs such as alternative teacher training, educational assistance and professional development, or who work with special education teachers.

According to the plan, the reduction could greatly hurt the DOE’s ability to comply with the state’s Reinventing Education Act and the state’s ability to meet federal requirements to reduce the number of nonhighly qualified teachers in the classroom.

Special Olympics

Also last night, the board reinstated some $119,000 for Special Olympics funding that had been previously cut from the DOE budget last month.

“This contract provides integral services to our special populations,” said board member Breene Harimoto.

Jasmine Fujiwara, a state resource teacher speaking on behalf of the 36 teachers, warned that the programs would be nearly eliminated.

“We are appalled that 90 — that’s nine-zero — percent of our section is being cut,” Fujiwara said.

“We risk falling out of compliance with both the Felix lawsuit (federal consent decree) and No Child Left Behind.”

The reduction also could hurt the DOE’s ability to coordinate professional development programs to increase student performance in reading, math, science and social studies.

Despite a failed attempt to cut the public school athletics’ budget in August, the DOE plans to cut about $800,000 for athletic equipment, supplies and transportation from the budget. League directors across the state collaborated to figure out areas within the budget that could be trimmed, education officials said.

Also included in the budget reduction plan are:

• About $2 million in science textbooks and learning materials.

• About $643,000 in cuts at nine alternative learning centers across the state, which help to educate at-risk students.

• About $1.6 million for speech pathologists, occupational therapists and physical therapists.

Credits: Honolulu Advertiser

House Price/Sales Data

Home Sales Hold Fast In Payette County. Idaho: “Median home prices in Payette County are at a manageable level for buyers. So far a total of 105 homes have been sold in Payette County during 2008 with the average, or median price, being $142,000 with prices in the area ranging between $120,000 and $160,000. Compare that to Ada County and Canyon County where the median home price is almost $250,000.”

Maui Home Sales And Prices Fall.  Hawaii: “Realtors Association of Maui: Sales of single-family homes fell to 65 in September, nine less than the same month a year ago… even though the median price dropped to $535,000 last month, $51,000 less than in September 2007. Maui’s slumping home prices follow similar sales on Oahu, where prices fell to the lowest point in more than 3 years, as well as on the Big Island and Kauai, where fewer homes sold despite a 20% drop in prices… Condo sales dropped 42.8% to 48 last month, the lowest level in five years, despite a median price decline to $388,500.”

Bend Home Sales Up In September. Oregon: “Bratton Appraisal Group: Bend’s housing market showed a positive sign in September when the number of single-family home sales rose to the highest level in more than a year… Seventy-six of the 120 homes sold last month in Bend, or 63%, were priced below $300,000. Median sales price per square foot… dropped from $157 in August to $139 in September in Bend, the city’s lowest level since April 2005. The city’s median sales price, meanwhile, dropped slightly to $276,000 in September, down from $283,000 in August. A year ago, the median price was $332,000 in Bend in September 2007.”

Economic Woes Hit Home. “Greater Las Vegas Association of Realtors: Realtors sold 2,783 single-family homes in September, compared with 2,545 sales in August and 990 in the same month a year ago. Sales of condos and townhomes increased 81.2% from a year ago to 386 in September. The inventory of homes on the Multiple Listing Service remained steady at 22,784 in September, compared with 22,710 in August. It’s down 5.9% from 24,218 in September 2007. The median single-home price slipped 7.1% to $195,000 in September, down 31.8% [y/o/y]…. Condos and townhomes were down 2.9 percent to $119,450.”

Home Sales Up 38%, Values Mixed. Florida: “The Orlando Regional Realtor Association reported a 38% increase in existing home sales in September, but a continued decline in home values. Members of the Realtor Association were involved in 1,335 home resales last month, compared to 970 during the same period last year. September’s median home sales price of $210,000 was 10.6% below September 2007’s $235,000, but 5% up from August 2008’s $200,000… Other Orlando market positives include month-over-month increases in the number of new contracts and in the number of pending sales, considered by housing economists to be a reliable predictor of future sales activity.”

Region’s Home Sales Rose In September. “Pikes Peak Association of Realtors: Single-family home sales in Colorado Springs in September rose 5.6% when compared with September 2007. The first year-over-year gain in monthly home sales since May 2006… September sales of existing homes… jumped 9.6% when compared with September 2007… For the first nine months of the year, however, combined sales of new and existing homes declined 15.9% when compared with the same period last year. The supply of homes for sale in September, meanwhile, dropped 10.8% compared with a year ago… The median price of homes sold in September fell to $200,000, a 4.8% drop when compared with September 2007.”

Area Housing Market Down In Third Quarter. “Central Penn Multi-List and the Greater Harrisburg Association of Realtors: The median home-sale price in Central Pennsylvania was down 3% during Q3’08. The median price of residential homes was at $168,000… compared to $173,000 in Q3’07… The number of residential housing units sold in Q3 also dropped 12%— from 2,411 units sold last year to 2,127 this year. Q3’08 listings stayed on the market an average of 70 days, up from an average of 57 days in 2007… While the median sale price declined, the average sales price went up, increasing to $194,074 — up from $182,028 for Q1’08.”

Pending Home Sales Surge. “National Association of Realtors: Pending home sales activity surged in August… The Pending Home Sales Index, a forward-looking indicator based on contracts signed in August, jumped 7.4% from July to August, and stood 8.8% higher this August compared to August 2007.  The index is, in fact, at the highest level since June 2007. Home sales are considered pending when the seller has accepted an offer, but the deal has not closed. Generally there is a one- to two-month lag before a sale is completed.”

Fort Myers-Area Home Sales Up. “Realtor Association of Greater Fort Myers and the Beach, Florida single-family homes sales in September climbed 4% to 756 from August’s 729. That’s about three times the number of sales for the same period last year of 275 homes… September’s median sales price slipped another 6% from August to $126,250. That’s 42% lower than a year ago at $218,000.”

NAR: Home Prices To Drop 8.3% In ‘08. “NAR: Sales of U.S. resale homes are projected to fall 10.9% this year compared to 2007, with the median price dropping 8.3%… Back in January, the group predicted that sales of resale homes would rise slightly this year and that prices would hold steady compared to 2007. The sales projection has actually been revised upward since the group’s previous forecast, released last month, which anticipated an 11.4% year-over-year drop in sales. NAR’s previous forecast called for the median price of resale homes to fall 7% this year, which is less than the drop anticipated in the [current] forecast.”

Home Asking Prices Fall: September Report. “Real estate research company Altos Research LLC: Asking prices for homes across the country fell 1.4% in September, bringing the total drop in the last three-month cycle to 2.9%… September findings of Altos’ 10-city composite listing price index… are based on market conditions in 26 major U.S. metropolitan statistical areas including - among many others - Boston, Cleveland, Dallas, Los Angeles, Miami, New York, Seattle and Washington, D.C. The Real-Time Housing Market Report, a joint publication between Altos and market analysis firm Real IQ, showed asking prices fell in 21 of these 26 metropolitan markets.”

Credits: Seeking Alpha

Coldwell Banker Pacific Properties is planning to reduce current asking prices on home listings starting Friday as part of a first-ever, nationwide event designed to stimulate the real estate market.

Nearly 100 homes, which represent about 15 percent of Coldwell Banker Pacific Properties’ listings on Oahu, will be reduced from 5 to 20 percent from Friday to Oct. 19.

The move is part of an initiative to jumpstart the local and national real estate market.

Oahu’s home sales slumped last month, according to statistics from the Honolulu Board of Realtors, even as median prices dropped to $590,000, its lowest point in 31/2 years.

“We felt this was perfect timing,” said Chason Ishii, president of Coldwell Banker Pacific Properties. “It’s our hope that the Coldwell Banker 10 Day Sales Event will move buyers off the sidelines and into the market.”

Ishii said due to higher inventory, historic low interest rates and declining list prices, this is a great time to buy a home on Oahu. First-time homebuyers also have the added incentive of a $7,500 tax credit due to recent legislation.

Oahu homes participating cover a broad range of neighborhoods and property types.

For instance, a two-story Wilhelmina Rise home, previously listed at $1.1 million, will participate in the event at a price of $990,000. A 4-bedroom Makakilo home, previously listed at $635,000, will participate in the event at a price of $604,000.

In total, the estimated list price reductions will amount to more than $4 million, Coldwell Banker estimates.

During the local sales event, participating agents will also collect donations for the Institute for Human Services, a nonprofit that runs homeless shelters and programs.

In a recent survey of 3,379 Coldwell Banker real estate professionals across the nation, 56 percent said listing prices in their market remain above where they need to be to attract qualified buyers.

The survey also found: 77 percent agreed the majority of sellers in their market still have unrealistic expectations regarding the initial listing price for their homes; 79 percent agreed appropriately priced homes in their market are attracting more buyers and moving more quickly; 76 percent feel that a 10 percent or less reduction in listing prices in their area is all it will take to help push these homes over the “tipping point” to a sale.

Credits: Star Bulletin

Hawaii’s real estate sales and lending community took interest yesterday in a drop in interest rates and the news that Fed Chairman Ben Bernanke had hinted about further cuts.

Bernanke said in a prepared speech yesterday that, “The Federal Reserve will need to consider whether the current stance of policy remains appropriate.”

If the Fed approves a rate cut on or before its next central bank meeting on Oct. 28-29, such a move could spur real estate activity in Hawaii’s wobbly market, Hawaii real estate and mortgage industry professionals said. Still, given the current credit crunch and historically low consumer confidence rate, it’s hard to gage how much influence a drop could have on the beleaguered market, they said.

Hawaii borrowers reacted yesterday when mortgage rates fell to 5.5 percent and will continue to react positively if they cycle lower, said Rusty Rasmussen, vice president for Castle & Cooke Mortgage.

“We had some bad news and some good news yesterday,” Rasmussen said. “The stock market lost another several hundred points, but the good news is that interest rates went down.”

Rasmussen said he expects a pick up in business as a result of favorable interest rates and the Building Industry Association’s Parade of Homes this weekend.

“It’s gets people thinking about homes,” he said. “And, they’ll want to take advantage of dropping interest rates because the difference in their loan payment could be huge.”

Given the current economic woes, Rasmussen said that he would not be surprised if rates dropped to 5 percent in the next few months.

“This is an historic time, it’s never been this bad,” he said.

Donald Lau, president of the Hawaii Mortgage Brokers Association, said Rasmussen’s projection is not out of line. If drop of this magnitude were to occur it would do much to inspire consumer confidence, Lau said.

“It would greatly alleviate consumer fears,” he said. “Rates are good now, but people aren’t moving. Another drop would get them out circulating their money around.”

Lowered interest rates were a major catalyst during Hawaii’s last real estate boom, said Harvey Shapiro, real estate economist for the Honolulu Board of Realtors.

Interest rates started declining in 2000 and bottomed out in 2003 at a 40-year-low, he said.

“The Treasury index went down to 1 percent in 2003,” Shapiro said. “Cheap money was probably the driving factor for many people who bought real estate.”

The market has been more volatile recently, he said. Last week the Treasury Index fell to 1.59 percent from 1.95 percent the week before, he said.

While a drop in the Treasury Index rate would help widen credit options to Hawaii homeowners and investors, not everyone will be able to get relief, said Stephany Sofos, a Honolulu-based real estate analyst and small business owner.

“There’s a credit crunch and money is less available,” Sofos said. “I’m not sure that we’ll see any discernible difference in the market.”

Credits: Star Bulletin

Home sales on the Big Island and Kauai declined in August along with median home prices, in line with trends on Oahu, according to the latest numbers from Hawaii Information Service.

Only 83 existing homes were sold last month on the Big Island, a drastic decline from 121 the same month last year. A 20 percent drop in the median home price to $320,000 from $400,000 a year earlier didn’t help boost sales.

The picture for Kauai’s real estate market was bleak as well, with only 21 home sales last month, 15 less than in September 2007. This was despite a 21.9 percent drop in the median home price to $525,000, down from $672,500 in September 2007.

Condos on the Big Island fared a little better, with a median price increase to $315,000 from $294,292 last year. But sales dropped by almost half to 24, down from 40 in September 2007.

On Kauai, condo sales last month were down to eight, 12 less than 2007 despite a 16.1 percent drop in the median price to $495,000 compared to $590,000 in September 2007.

Because the markets on Kauai and the Big Island are smaller than Oahu, a few sales can skew medians, but last month’s statistics were consistent with the downward turn statewide.

The median sales price for an Oahu home dropped to $590,000 in September, its lowest point in 31/2 years, while the median price for a condo fell to $296,000, its lowest point in more than 21/2 years.

“The neighbor isles have been off considerably on both the Big Island and Kauai pushing two years,” said Jim Wright, chief executive of Century 21 All Islands. “Honolulu’s just starting to react to the same pressures.”

In this kind of market, Wright said newly minted real estate agents who could list a property and get multiple offers during good times won’t find it so easy any more. But these times are also good for agents to brush up on skills and work on additional professional designations, he said.

Year-to-date, Big Island sales volume for homes dropped 45.7 percent to $438.5 million, compared to $807.9 million in 2007. On Kauai, the sales volume for homes year-to-date dropped 36.7 percent to $206 million compared to $325.6 million during the same period last year.

Credits: Star Bulletin

Condominium sales on Kauai plunged 60 percent in September, compared to last year, while sales of single-family homes on the Garden Isle fell 42 percent.

Prices also fell in both categories, according to statistics from Hawaii Information Service.

The median price of a single-family home on Kauai last month was $525,000, a 22 percent drop from September 2007, when it was $672,500. Year-to-date prices fared better, declining by about 4 percent to $632,500, down from $661,000 during the first nine months of 2007.

The median price of a Kauai condo in September was $495,000, down 16 percent from the same month last year, when it was $590,000. Condo prices remained flat for the first nine months of the year, with a median price of $560,000, which was the same as for the same period in 2007.

There were only eight condo units sold in September, a 60 percent drop from the 20 units sold in September 2007. Year-to-date sales were down by 40 percent, with just 144 units sold during the first nine months of the year, compared to 241 units sold during the same period in 2007.

Single-family home sales fell 42 percent in September, with just 21 Kauai houses sold compared to 36 houses sold during the same month last year. Sales for the first nine months of the year were down 33 percent, with 226 homes sold, compared to 335 homes sold during the same period in 2007.

Credits: Biz Journals

Thousands of Oahu real estate agents feel the impact of our slowing economy as deeply or more deeply than anyone.

The good news is Hawaii’s real estate, depending on your neighborhood is not in the kind of trouble seen in many mainland markets.

The bad news, more than 70% of Oahu real estate agents have sold two homes or fewer this year. That’s a direct and big impact on them and their families.

Oahu home and condo prices are down only 3% from last year, which means Hawaii is doing a whole lot better than other parts of the country.

But sales dropped almost a third, which means you have a whole lot of real estate agents who can’t generate enough income to get by.

The people who live in this Kaimuki house are ready for Halloween.

They’re also ready to move.

The Matsudas who live next door say, they’ve seen a real slowdown in the housing market.

“It’s been going downhill gradually,” said Karen Matsuda.  “And from last year, it’s definitely been down.”

Along a stretch of Pahoa Avenue, only two other homes for sale.

Quite a difference from a few years ago, when properties were bought and sold on a regular basis.

“In the real estate market, that has a definite effect on real estate agents because they’re looking at the number of transactions they’re putting into escrow,” said Real Estate Executive Scott Higashi.

In the past year, 40% of Oahu real estate agents made zero transactions, which means no home sales.

That’s about 2,000 agents.

The reason is because homeowners like the Matsudas are staying put, and not taking on additional risk.

“I wouldn’t take a chance on picking up another house, taking a mortgage out on anything at this point right now,” said Matsuda.

But Higashi says, as the market slows down, it’s time to act fast.

“People do think twice about, maybe should I wait, should I not move forward at this time. The reality is, owning a home is still a good idea and interest rates are really cooperating,” said Higashi.

Trying to make sense out of an industry that depends on dollars and homes.

Just in the Kaimuki area, the average home price is just under $900,000, so home prices are holding steady.

But the board of realtors thinks the slowdown will continue for at least a couple of years.

Credits: KHNL

Residents soon will find out how much Honolulu’s planned 20-mile elevated commuter train from East Kapolei to Ala Moana could cost to build, operate and maintain.

The question is, will they get that updated information before a Nov. 4 vote on a charter amendment authorizing the establishment of a steel wheel on steel rail transit system. An updated version of the 2006 financial plan for the train will be included in an upcoming draft environmental impact statement. That document is targeted for release late this month and will include updates on the number of potentially affected properties, noise and visual impacts, and potential impacts on archaeological sites, among other things.

According to the city’s 2006 Alternatives Analysis, the first 20-mile segment is expected to cost $3.7 billion to build. Those costs are expected to increase in the draft environmental impact statement to account for recent rises in inflation and construction costs.

However, residents may not have access to those details before a Nov. 4 vote on whether to build the train. That’s because the document, which was originally scheduled to be finished in the spring, is still being vetted by the federal government.

Rounds of discussion

The Federal Transit Administration and the city of Honolulu are in the first of what could be several rounds of back-and-forth discussion over the document’s contents. The city is in the process of responding to the agency’s comments on the first administrative draft of the draft environmental impact statement, said Mark Scheibe, deputy project manager for Parsons Brinckerhoff.

If everything goes well, the updated environmental impact document should be released before the election, he said.

“We’re trying to get our responses to them as quickly as we can,” Scheibe said. “If they’re happy with it, and we can turn it around, then we’ll have it out later (this) month.”

However, “If we have to go through another iteration of comments, this is probably not going to happen” in time for the election, he said.

FTA spokesman Paul Griffo said the agency is aware of Honolulu’s Nov. 4 vote on the rail system. However, that date will not dictate the release of the project’s draft environmental statement. The FTA won’t know when the statement will be released until after it receives and assesses the city’s first round of responses.

Often, the FTA and a local community go through several rounds of comments before releasing a draft environmental impact statement, Griffo said.

“Much of the time, there’s more than just one round of comments,” he said. “There’s a process that needs to take place and that needs to play out regardless of local considerations.”

Delays in release

Despite delays in the release of the draft environmental impact statement, city officials maintain the $3.7 billion project is still on track to break ground in December 2009 and begin partial operations by the end of 2012. The city plans to complete the full 20-mile, 19-station elevated commuter line in about a decade. It will be the largest public works project in state history and will have major environmental, social and economic impacts.

New cost estimates

Among the most anticipated updates contained in the draft environmental impact statement are new capital and operating cost estimates.

According to the city’s 2006 alternatives analysis, the train is expected to cost about $5 billion when adjusted for inflation. That’s the price for a route that passes Honolulu International Airport, but excludes spurs to West Kapolei, Waikiki and the University of Hawai’i-Manoa.

The current route now goes through the Salt Lake area with a shortened 2.1-mile, $350 million airport spur. That spur would bypass Pearl Harbor and Hickam Air Force Base, though service to those areas could be added at a later date.

In addition to those capital costs, the train will cost an inflation-adjusted $1 billion to operate and maintain from 2019 to 2030. What’s still undisclosed is how much the train will cost to operate between 2012 and 2019.

The draft environmental impact statement will include those details as well as updated transit tax revenues forecasts. Those forecasts are expected to take into account the state’s current economic slowdown.

City officials hope to raise an inflation-adjusted $4 billion between 2007 and 2022 to pay for the 20-mile version of the system. That, coupled with $925 million in anticipated federal funds, is expected to pay the $5 billion in capital costs associated with rail, according to the city’s financial plan. That financial plan is based on outdated tax-revenue forecasts generated in September 2006, when more robust economic growth was anticipated.

updated plan

The city and Parsons Brinckerhoff contend the draft environmental impact statement won’t be radically different from information that’s been previously released to the public.

“I don’t think people are going to look at it, perhaps except for the costs, and feel that there’s been a quantum change,” Scheibe said. “It’s not like the (draft environmental impact statement) will contain all of this incredibly new information. We’ll have an updated financial plan. We’ll have costs expressed in later-year dollars.”

But, “the cost isn’t going to be doubled. It’s going to be what you can expect from two years of inflation,” Scheibe said.

Rail project critics contend the draft environmental impact statement contains information voters should have before voting on the train. However, the city has no incentive to release that statement before Nov. 4, said outspoken rail critic Cliff Slater.

“There’s no way that things are going to look better” after the draft environmental impact statement is released, Slater said. “There’s fundamentally no good that can come of it from their standpoint. It’ll give ammunition to us.”

The city and the FTA won’t rush the release of the draft environmental impact statement, Scheibe said.

The “FTA and the city, from a defensive point of view, want to make sure that the (draft environmental impact statement) is as bulletproof as it can be when it goes out,” he said.

“We’re not going to rush something out because the election is coming.”

Meanwhile, the city will not disclose any updated information contained in the draft environmental impact statement without FTA approval.

The FTA said it discourages city government officials from prematurely disclosing details of a draft environmental impact statement.

“It wouldn’t be the most prudent thing to do because it’s a working document,” said FTA spokesman Griffo.

Credits: Honolulu Advertiser