Is Hawaii’s P3 industry at risk of another HART problem?

Deputy Editor Jonathan Davies takes a look at how the Aloha State is trying moving on from its failed P3 procurement last year

Hawaii found itself at the center of the one of 2020’s major P3 sagas. Alongside the considerable success stories of the last year, the P3 news cycle was dominated by two stumbling rail projects: Maryland’s Purple Line and Hawaii’s Honolulu Rail Transit (HART), each of which met very different conclusions.

After the mayor of Honolulu publicly withdrew his support for the project, in part due to alleged cost rises, the project limped on for several months on life support as the transit authority’s board failed to muster the majority needed to push through a termination vote – and its chief executive Andrew Robbins sticking by the P3. Eventually, the $2.4bn light rail project was canceled at the end of last year and will now be re-tendered as a design-build.

It might be assumed that the long, drawn out saga would shake the state’s confidence in the model, however Hawaii is still carrying a serious amount of P3 momentum into 2021.

The Department of Navy’s Joint Base Pearl Harbor Hickam energy P3, which will deliver a major new energy production, storage and transmission center on the island, is currently considering proposals after they were submitted at the end of last year.

The University of Hawaii has said P3s are a “significant part of [its] strategy moving forward”, following the successful tendering of its accommodation P3.

Most notably, however, two key projects are shining a light on P3s in the Aloha State.

In February this year, the State of Hawaii released a request for information (RFI) for its new Oahu Community Correctional Center (OCCC) P3 project, which will replace the existing prison with a new 1,000+ bed facility.

Governor David Ige supported using the model, saying: “Because of the cost involved in replacing OCCC, we believe a public-private partnership would be the best way to finance the state’s effort to alleviate overcrowding.”

As political backing from the top goes, it was pretty conclusive.

Later in the same month, however, Ige cast doubt on the state’s other main P3: the New Aloha Stadium Entertainment District  (NASED) P3.

Despite reports that the stadium project was due to release a request for proposals (RFP) to three shortlisted teams at any moment, the project looked under threat when the governor said that “the total cost of a replacement… is really hard to fit into the budget based on all the construction needs we have” – promoting fears of another HART attack.

Since those comments, the project has taken another sudden and unexpected turn: the P3 is to be continued, but it will significantly scaled back.

The project will now be split in two: the existing P3 will redevelop the stadium with a new 35,000 capacity ground and supporting infrastructure, while a separate procurement for the surrounding real estate developments will be launched later this year. It is not yet clear whether that will be a P3 or design-build contract.

So what is happening? Is the procurement split a signal of compromise or division? It’s hard to tell. Clearly, Ige is not ideologically averse to the P3 concept, otherwise he would never have allowed NASED to get this far – nor would he be backing the model for the OCCC development.

In echoes of the HART scheme, it appears that concerns over costs that have been at least in part to blame for the last minute change. The HART scheme collapsed amid rumors of escalating costs, and once  again, questions may be asked over the planning that went into this project from the public sector at the outset.

Whether the P3 industry will stomach uncertainty of this kind is yet to be seen. The three teams in the running are now bidding for something quite different to their original expectations, so how (or if) they respond to the scaled back RFP will be telling.