Hawaii's Real Estate Market Mirrors National Trends
July's report shows a continued decrease in number of sales.
The Honolulu Skyline Rail System was proposed to make huge impacts to Oahu’s real estate, with Transit-Oriented Development (TOD) of housing, services, and jobs planned for each of the rail stops. According to the City & County of Honolulu, the Skyline and the planned development around it, could transform real estate on Oahu.
However, the Skyline was once promised to be running in 2020, and in 2012, a construction budget of $5.2 billion was promised to the Federal Transit Administration. Now the rail construction is going at a much slower pace than promised, the proposed budget has doubled, and ridership of the first Skyline release is much lower than expected. With these controversies and more, many people may be wondering if it'll ever be completed.
The 20-mile rail system includes 21 stations:
It is expected to take 42 minutes to ride from East Kapolei to Ala Moana Center and 16 minutes to ride from the Honolulu Airport to Ala Moana Center.
Notice that each station name also has a Hawaiian name, reflecting forgotten names, sites, and events in Hawaiian culture. The Honolulu City Council resolved to have a group of experts gather community knowledge, ethnographic research, and oral accounts to develop accurate and culturally authentic stations names – with the hope of perpetuating the traditions, culture, and history of Hawaii for many generations to come.
Each station will have these enticing features:
There are a number of educational institutions along the rail: UH-West Oahu, Leeward Community College, Honolulu Community, and Hawaii Pacific University. HART says a rail extension could be constructed in the future to link the Ala Moana Center stop to UH-Manoa.
The rail system will be powered by environmentally friendly electricity. The plan is for the rail to be powered by alternative energy sources, such as solar, wind and biofuels. The Rail Operations Center (ROC), located between Waipahu High School and Leeward Community College, is a 43-acre LEED certified building where the trains will be maintained.
The rail will be integrated with the city bus system with a single system-wide transit card, called Holo Card, making transitions from the station to a workplace or entertaining option easier.
The new Honolulu Skyline Rail Transit trains are advertised as having top-of-the-line features, including the following:
There will be a total of 20 four-car trains, with 17 trains in operation during peak hours, and eight trains during non-peak periods. A four-car train has a maximum capacity of 800 passengers, with 188 seats in each four-car train.
The first 10.75 miles of the Skyline opened on June 30, 2023 – from East Kapolei to Aloha Stadium. This includes 9 different rail stations and 12 trains.
Originally, Honolulu Rail was planned to run to Ala Moana, however due to cost increases, HART does not have enough money to finish construction. Instead, a proposed recovery plan, was presented and approved, outlining a shorter route to South Street in Kakaako. HART officials say the shortened 18.5-mile route with 19 stations will be running by 2031 if there are no further delays. Before that, a planned second release is scheduled for 2025 and includes stops until Pearl Harbor, Daniel K. Inouye International Airport.
The City & County of Honolulu is still committed to fulfilling the original plan to Ala Moana, but it'll likely be deferred until new funding can be obtained.
Construction of the Skyline Rail continues in many areas including Farrington Highway, Kamehameha Highway, near the airport, and in Kalihi. Stations near Halawa were completed, and utilities were being relocated for the rail through Kalihi and downtown. However, relocating utility lines along Dillingham Boulevard for the last 4 miles of the rail proved difficult, as traffic and permitting issues along with limited space underground have caused various issues. Work is ongoing to relocate overhead utilities above Dillingham Boulevard, and the original route for the Skyline has move close to the mountains or mauka through the Kalihi portion.
Early during the coronavirus pandemic in Spring 2020, Governor Ige and Mayor Caldwell said the Honolulu Rail Project was “essential infrastructure,” so the Skyline Rail Transit construction continued without interruption.
HART’s Safety and Human Resources teams added safe working practices for construction workers or office staff to continue moving forward on completing the Oahu rail. About 80% of office staff worked from home, aiding physical distancing at HART. Additional PPE was given to rail construction crews, and HART Honolulu conducted site compliance checks to ensure safe working conditions and regulations were followed during the COVID-19 pandemic.
While construction continued on the rail during the COVID-19 pandemic, funding for the rail became more difficult due to the pandemic and its impact on the Hawaii economy. The Hawaii State Legislature has approved additional funds for the construction of the rail in the past: $1.5 billion in 2015 and $2.4 billion in 2017. However, because of the state’s budget crisis due to the pandemic, the future funds for the rail’s construction are unknown. Furthermore, HART received millions of dollars less in hotel room and excise taxes since tourism shut down and the Hawaii economy weakened.
As a part of some of the COVID-19 relief packages passed through Congress in March 2021, Senator Brian Schatz, who is the chair of the Senate’s Appropriations Subcommittee on Transportation, was able to secure $70 million for the Honolulu rail transit project. The Oahu rail had a loss in tax revenue estimated around $376 during the COVID pandemic, as a result of less room and excise tax, and as reported by HART.
Currently, the trains run 14 hours per day on weekdays, from 5 a.m. to 7 p.m. On weekends and holidays, they run from 8 a.m. to 5 p.m. Trains arrive at each station about every 10 minutes. The Skyline rail trains will travel a top speed of 55 mph and an average speed of 30 mph.
HART's original plan, with a route from Kapolei to Ala Moana, estimated 119,600 boardings everyday and about 55 percent of these passengers will walk or bike to a station. It was forecasted that Skyline Rail will remove 40,000 car trips from Honolulu’s crowded roads, reducing gasoline consumption by 16,000 gallons.
With the new recovery plan, estimates have been updated to 84,000 daily boardings.
Actual passenger numbers for the first release of the Skyline ranges between 2,600 and 3,400 passengers per day.
$1.55 billion of the construction costs for Skyline are being paid for with funds from the Federal Transit Administration (FTA). As of July 2020, HART had received a little over $800 million of the $1.55 billion federal grant, which was approved in 2012; FTA has not released any new funds to HART since 2014 because it wants Honolulu to be able to show it has a plan to complete the rail with the necessary funding. Also, the U.S. Justice Department and the FBI has launched a criminal investigation into the Honolulu Rail project.
In April 2021, Honolulu Mayor Rick Blangiardi, along with City Council Chairman Tommy Waters and interim HART executive director Lori Kahikina, sent a letter to Hawaii’s Congressional delegation, asking them for an addition $800 million to help build the rail from Middle Street to Ala Moana Center. However, the message was fairly clear that the federal government does not plan on approving additional funding for Honolulu’s rail.
Besides federal funding, another large percent is being paid for by tourists making purchases on Oahu via the 0.5% General Excise Tax (GET) surcharge. The rest of the Honolulu rail transit is being paid for by all Hawaii residents and businesses through a 0.5% GET surcharge, which has been collected since 2007 and will continue through 2027. The room and excise taxes are expected to generate around $7 billion toward the Honolulu Skyline Rail Transit project – its largest source of funding.
HART Honolulu is also using short-term bonds to finance the rail construction, which will be paid back using federal funds and the GET surcharge revenues.
Aside from the budget to complete the construction of the Skyline, we also need to consider the budget to continue operations. It was estimated by Joe Kent, the Vice President of the Grassroot Institute of Hawaii, that taxpayers will pay around $54 per passenger. Fares to ride the skyline are currently $3 per adult, so we can adjust that cost to $51 per passenger.
While some people may see the rail as an eyesore in the Hawaii sky, others may view it as an innovative transportation method that will transform Oahu. During the design phase, many professionals and community members collaborated to decide the final design.
In the end, the elevated Skyline transit design was chosen for its safety, efficiency, and reliability. Cars and pedestrians will not interfere with the train and vice versa, avoiding collisions and ensuring that train riders will get to destinations on time, regardless of congested traffic. Also, an elevated system is less expensive than an underground alternative.
The trains’ steel wheels and steel-rail technology were recommended by a panel of engineering and transit professionals and approved by Oahu voters in 2008. The “steel-on-steel” technology was then one of the most advanced technologies in the world and said to be quiet, smooth, and efficient.
HART stands for the Honolulu Authority for Rapid Transportation, and they are a semi-autonomous public authority responsible for planning, constructing, operating, and maintaining Honolulu’s rail transit. HART has a 14-member board composed of the Department of Transportation director, the Honolulu City Department of Transportation Services director, and 11 volunteers from the community (three appointed by the Mayor, three by City Council, three by the State Legislature). The voting members then appoint the fourteenth member to the board.
HART employs hundreds of workers and business partners to construct the rail and is ultimately responsible for its completion. In January 2021, HART named Lori Kahikina, the city’s environmental director, as its interim CEO - after HART decided not to renew Former CEO Andrew Robbins’ contract. Within the first few months of Kahikina’s start date, nearly 50% of the city employees who were at HART when she arrived were no longer there, many being fired and some resigning.
“I am ready for the challenge of moving this important project forward,” Kahikina said in a public statement. “I commit to doing the best job possible for the citizens of the City and County of Honolulu and our entire state.”
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