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P3s could help revenue shortfall at Hawaiian rail project at value of $6.83 B
2016-08-09 20:17:13
Claire Thompson
Unimaple Technology Ltd.

The 20-mile passenger rail project in Oahu, Hawaii, may bring in only $6.83 billion in revenue but could cost about $8 billion to construct. Several solutions to the shortfall include a variety of public-private partnership proposals.

P3s could help with revenue shortfall at Hawaiian rail project

Honolulu, which is struggling to determine how to pay the high cost of building a 20-mile, 21-station elevatedrail line across the island of Oahu, may be able to attract private funding by inviting developers to build mixed-use projects on land surrounding stations.

The Honolulu Authority for Rapid Transportation (HART) estimates that the project will cost almost $8 billion to build but would produce only $6.83 billion in revenue, leading to a deficit of $1.14 billion, the authority said in aproject presentation published May 2016.

HART highlighted three options that would reduce the project’s scope to keep it within budget but also suggested a fourth approach under which the authority could negotiate P3s to build the stations. HART pointed out however that the P3 option would require halting work on nine stations that already are being built and could make it difficult to schedule completion of the entire system.

The P3 option could be complemented by the notion of considering each station as a “happening place,” with a theme developed with surrounding neighborhood stakeholders and a potential developer, suggested Ray Tsuchiyama in the Aug. 4 issue of Honolulu Civil Beat. These attractions — including retail shops, restaurants and entertainment venues — would increase train ridership throughout the system while allowing the developer to earn revenues, a portion of which would be used to pay for some of the $900 million it could cost to build the rail stations, which could be done by either the public or private partner.

Development around each station would be designed to attract visitors and tourists as well as nearby residents who also might find employment at the businesses that sprout up around each station. Such mixed-use development could range from coffee shops, daycare centers and medical clinics to an electronics file storage center, a sports arena, a music and dance venue or museum exhibits. In fact, each station could be designed to provide a specific type of experience or theme for station users to enjoy.

“Under public-private partnerships, the 21 rail stations could be imagined as micro-destinations — to live, work, shop, eat or be inspired by the arts and music,” Tsuchiyama wrote.

This type of mixed-use development coupled with rail projects is starting to sprout up in other parts of the United States. The conversion of a post office to a train hall as part of the renovation of Penn Station in Manhattan will include development of retail, commercial and office space to serve passengers, while Amtrak is pursuing mixed-use development in its redevelopment of Baltimore Penn Station.

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