Tuesday, February 24, 2009

Dick Mayer's comments on the Act 2 Pseudo-'EIS'

The following are retired Professor Dick Mayer's comments on the Act 2 Pseudo-'EIS':

Sender's address
Sender's e-mail

Ms. Katherine Puana Kealoha
Director, Hawaii Office of Environmental Quality Control
235 S. Beretania St., Suite 702
Honolulu 96813
Fax: (808) 586-4186

Mr. Michael Formby, Deputy Director
Hawaii Department of Transportation, Harbors Division,
79 S. Nimitz Highway,
Honolulu 96813
Fax: (808) 587-3652

RE: Comments on Draft “Pseudo” EIS for the “State-wide Large-Capacity Inter-Island Ferry.”

I recognize that this draft is a pseudo-EIS because it is being prepared under the unconstitutional 2007 Special Session Act 2 provisions, instead of the legal environmental review requirements found in HRS 343. However, I am hoping that you will include a full response to my suggestions in the final version of the “Statewide Large-Capacity Inter-island Ferry” document.

My comments will be very specific and will deal with the fiscal impacts of this “proposed” project.

The draft discusses the fiscal impacts in both Chapter 4 and Appendix G. However, there are numerous aspects of the State’s Revenues and Expenditures which have either been ignored or misrepresented. I will try to point these out, and expect that they will be correctly included in the Final document.

The draft has ignored all of the following State costs which have been or will be DIRECTLY related to the “Statewide Large-Capacity Inter-Island Ferry.”

1. The State's interest payments of about $2,000,000/year on the $40,000,000 State issued general obligation reimbursable bonds. The Ferry is being asked to pay only the $40 million principal. (Explanation: $2 million is 5% of the $40 million loan.)

2. The “Ferry's need for Kahului wharf space forced the State to buy the land where Kahului Railroad building is located (to relocate Young Bros. operations at Kahului Harbor & to handle less-than-container load shipments). This purchase is mentioned in the Draft, but the dollar amount is NOT included. It is a direct cost, no matter which Ferry uses Pier 2 in Kahului.

3. The Legislature's operating costs in its several failed efforts to pass bills that would over-ride the DOT's mistaken exemption of the required HRS 343 Environmental Review.

4. The expenses of the Office of Environmental Quality Control which had to conduct a special meeting of the Environmental Council just to review the DOT’s mistaken exemption decision.

5. At least twelve (12) legislatively mandated DOT-funded meetings to receive input that an environmental review would have evaluated.

6. The DOT and the State Attorney General had sizeable (unreported in the Draft) expenses during the four-year legal battle with three groups opposing State-wide Large-Capacity Inter-Island Ferry operations on environmental grounds. The case history includes numerous hearings and document filings, a four-week trial in Maui Circuit Court, and a Supreme Court hearing, and now a pending appeal before the Hawai'i Supreme Court, resulting from the 2007 Special Session Act 2. Furthermore, the court ordered the State to pay for the citizen's court costs, and these costs must be included in the Final document.

7. The expenses for the Governor's costly Special Legislative Session in October 2007 to pass Act 2, giving the Hawaii Superferry a special exemption from our environmental law. It served as the rationale for the very Ferry project that this document is analyzing.

8. The damage to our environment resulting from the diversion of State Dept. of Ag. inspectors to the harbors, instead of their being utilized to eradicate existing alien species.

9. A similar diversion of State DLNR staff from their normal duties protecting the State’s precious environment. Although their salaries have been included, the Draft has ignored the damage that may have occurred to the environment.

10. Future, but at this time, uncertain costs to maintain and repair barges and harbor facilities. Not mentioning these inevitable expenses does not mean that they are not going to happen, at great potential cost.

11. The costs to operate the six month “Oversight Task Force” have been omitted on Page 4-95.

12. The Costs of the State Auditor’s investigation and Report which are directly tied to the State’s mis-handling of the Ferry project.

13. The costs to operate the “Rapid Risk Assessment” have been entirely omitted on Page 4-95.

14. The additional cost (above $1.6 million) for this Draft/Final “pseudo” EIS.

15. The new mooring system for Kahului Harbor (estimated at more than $1 million).

16. The costs to prepare Pier 19 in Honolulu for the 2nd ferry that is described throughout this Draft.

17. Special Traffic Study that was needed for Kahului Harbor.

18. Security expenses (Helicopters, many Coast Guard vessels, and many dozen armed and plain-clothes personnel) at Kahului Harbor during mid December 2007. Only Nawiliwili security is included and only a portion of the “unified command” costs.

19. The very large potential costs to construct a new Ferry pier or docking facility on the West Breakwater at Kahului Harbor which will inevitably be needed before 2030 because of the congestion on + near Pier 2. Since cruise ship traffic is down, most of the expense of the new West Breakwater facility will probably be the result of Ferry operations.

The Draft not only fails to list and calculate costs to the State properly, but it also errors in its State revenue calculations. In general, State Expenses are underestimated, and Revenues are exaggerated.

20. The State Revenue figures in Chapter 4 (Pages 4-93ff.) are derived from the more detailed estimates in Appendix G (Pages G-53ff.). On page G-55, footnotes 5 +6 +7 are all based on the ferry company’s “Gross Receipts.” For example, $3.456 million Excise Tax revenues would reflect Gross Receipts of about $86,400,000. Given the number of estimated passengers on Page 4-97, and the number of vehicles on page 4-98, $86 million is a wild over-estimate. Consequently, State Revenues should be scaled back in the Final document.

21. Given the fact that the present ferry company cannot even get a break-even passenger load with its reduced fares that completely waive the “Fuel-oil adjustment,” it cannot be assumed that the company will have a profit and that the State will receive any “Corporate Income Tax” payment, as is assumed on page G-55.

22. A large portion of the expected Net State Revenues (supposedly, $5-$10 million per year) is derived from high visitor expenditures by ferry passengers. This is very misleading, since many of the passengers are local residents who will be merely shifting their spending from one island to another, resulting in NO increase in State revenues. As for mainland tourists who use the Ferry, they would be using an airplane instead and would be spending roughly the same amounts on what ever island they visit, again NO increase in State revenues.

23. Totally ignored in the Revenue calculations is the significant revenue LOSS because ferry passengers will take their car instead of renting a vehicle. The State will lose $3 per day for each of the 3.8 days that the average passenger will spend on the other island. That is a loss to the State of $3 * 3.8 = $11.40 for each person who takes a vehicle instead of renting.

According to page 4-98, there will be about 206,000 vehicles shipped. At $11.40 per vehicle, that is $2.35 Million per year in LOST rental-car State revenue. Not a small amount.

Finally, and very significantly, the fiscal impacts section needs to have a thorough discussion of the huge loss that the State would incur if NO Ferry uses the barges, and does NOT make the expected repayments for the $40,000,000 spent to place the otherwise useless barges at the end of several piers. HSF has already delayed its 2nd vessel; how soon will it pull out the Alakai? And is there a mystery company just waiting to enter the business?

Who will make those payments? The poor taxpayers of Hawai’i who will need to pay freight shipping companies higher fees to stabilize the Harbor Improvement Fund.

Mahalo for considering and responding to my comments,

Dick Mayer

[Additional official comments filed with the OEQC and DOT to follow.--ed.]

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