The Hawaii Superferry stopped operations over eight years ago and yet, the state auditor says, Hawaii continues to pay the exorbitant costs incurred to support it.
The outstanding balance as of July 1, 2017 is $32.6 million, according to a new report, which Hawaii will continue to pay off over the next 11 years.
“The amount of money, I think, is surprising to me as well as people in the public,” said state auditor Les Kondo.
The report comes as the Hawaii Department of Transportation studies the feasibility of establishing an interisland and intra-island ferry system. The state Legislature appropriated $50,000 to the DOT last year, and the department received an additional $500,000 in federal funds for the study via cooperative agreement on Feb. 28.
“We wanted to do a report that would give the information that we thought might be interesting and meaningful to the Legislature, to the department, as well as to the public, especially as they start studying the feasibility of another interisland ferry system,” said Kondo.
Kondo notes that the figures are based on the DOT’s financial accounting records, which were not independently verified.
Here’s how the numbers break down:
DOT paid $38,127,915 to Healy Tibbitts Builders for the barges and vehicle ramp systems for the Hawaii Superferry at Honolulu, Kahului, and Kawaihae harbors.
Shortly after the ferry began service, Kahului’s barge-and-ramp system repeatedly damaged its pier during storm surges and high winds.
To ensure safe loading and unloading, the DOT commissioned a tugboat to hold the barge snug against the pier at a cost of $506,804.
After the Superferry shut down on March 19, 2009, the barge-and-ramp systems were broken down and transported to Honolulu Harbor for an additional $223,232.
The systems were then sold on Oct. 29, 2013, for $382,500. Kondo notes that the return is just over one percent.
“You have to think a little and say wow, that’s a crazy difference,” Kondo said. “We had to do a graphic that showed a bar chart or something, but our graphics person said that number is too small to see, so we had to write the numbers down.”
Why was so little money recouped? According to the report:
“The three state-owned barges were built in China and therefore were not part of the Jones Act Fleet. The Jones Merchant Marine Act of 1920, often referred to as The Jones Act, is a federal statute passed by Congress in 1920 to regulate maritime commerce in U.S. waters and between U.S. ports and to protect the domestic shipping industry. The Jones Act requires vessels engaged in U.S. domestic shipping to be U.S.-flagged vessels built in the United States.
Since the State’s barges were built in China, they could not be converted to cargo carriers, since they would be prohibited from carrying merchandise and cargo between U.S. ports. In addition, the barge-and-ramp systems were designed specifically for Hawaii Superferry’s use and could not be repurposed by other harbor users. These factors likely had profound impacts on the resale value of the barge-and-ramp systems.”
Since lawmakers requested the new feasibility study, we turned to two state senators to float the idea: “Some might argue that maybe we should first look at what we have to take care of, which is that $32.6 million, before moving on to any type of water transportation.”
“Well, yes, but it certainly, we can do both and see what a new study would be like rather than wait until … the end of the payment schedule,” said Sen. Lorraine Inouye, D, chair of the Senate Committee on Transportation and Energy.
“I don’t think they’re going to find, without some sort of government subsidy, I don’t think you’re going to find a system that will work that people like or that people will use regularly that will pay for itself,” said Sen. Brian Taniguchi, D, Manoa, Makiki, Punchbowl. “Hopefully they will also take a look at if there’s a way we can kind of include, or help offset some of the cost of this bond through a new Superferry. That’s my hope, but I’m not holding my breath.”
The DOT says the study will likely take up to three years to complete.