Honolulu's proposed $5.5 billion elevated commuter train project won a key endorsement from the federal government yesterday.

The Federal Transit Administration gave the city approval to begin the preliminary engineering phase of the project. During preliminary engineering, the city will finalize management plans, refine the route's alignment and project costs and further identify benefits and impacts.

The 20-mile East Kapolei to Ala Moana project still must overcome several major hurdles before construction can begin as scheduled in December.

But yesterday U.S. Sen. Daniel K. Inouye and Mayor Mufi Hannemann took a moment to celebrate this initial support from the federal agency that they hope will provide about 28 percent of the project's funding.

"This is a critical federal milestone and an important accomplishment in the development of Honolulu's rail transit project," said Inouye in a news release. "The competition for preliminary engineering among our nation's cities is fierce."

"The Hawai'i Congressional delegation remains steadfast in its support for a rail transit system in Honolulu," Inouye said.

Hannemann added, "We're in the homestretch now and we need to move forward so we can put people back to work, help the economy turn around and create the option that our residents need to help relieve traffic congestion on our island."

The city's entry into preliminary engineering was delayed by at least six months in part because of a February decision to alter the train's route to pass through the airport district rather than the Salt Lake area.

EIS AWAITED

The next major milestone for the project is a release of a final environmental impact statement, which the city has said should occur this month. If all goes well, the city expects to receive a "record of decision" from the FTA about five weeks later.

The city also will need a "letter of no prejudice" from the FTA. That gives the city permission to spend city money on the project without jeopardizing the possible future influx of federal funds. The city needs $1.55 billion in federal funds to pay for the project. However, the city doesn't expect to find out whether it will get that money until early 2011.

The city also will need to award the biggest transit-related contract so far — a $550 million to $600 million deal to design and build an elevated six-mile guideway from East Kapolei to Leeward Community College. That estimated amount excludes an unspecified amount to cover contingency costs.

City administration officials also will eventually need City Council authorization to issue up to $1 billon in bonds needed to complete the project. The city has about $154 million in transit tax collections in the bank, according to an August version of the city's financial plan.

Hannemann in a news release yesterday said the entry into the preliminary engineering keeps the project eligible for about $1.5 billion in federal funding for rail construction. In addition, the city now can spend $39 million in federal transit funds, including $4 million federal stimulus money.