Hennepin County Board approves Southwest light-rail cash infusion — in theory

Hennepin County commissioners on Thursday authorized an additional $204 million for the Southwest Corridor light-rail project, but their commitment was fraught with concern about the transit line's climbing costs.

The funding infusion was required after Southwest's budget recently surged to just over $2 billion due to the increased costs of labor, steel, fuel and other unanticipated cash outlays.

"The lift has gotten heavier," said Jan Callison, commission chairwoman.

All told, Hennepin County is expected to contribute $801 million for Southwest, a portion of which will be paid with a half-cent transit sales tax. While the board approved the expenditure in theory on Thursday, members will consider funding the full amount after several key milestones are achieved this summer.

Still, the county's new commitment to the state's costliest public works project sends a powerful message to the Federal Transit Administration (FTA), which is expected to contribute $929 million toward the 14.5-mile rail line. The FTA will not contribute its share until it is assured that local partners are on board financially.

The Metropolitan Council, which will build and operate Southwest, is expected to apply for the federal grant in September and hopes it will be awarded in the first quarter of 2019. But there's no guarantee that will happen.

Transit projects in Seattle; Santa Ana, Calif.; Durham, N.C., and the Bottineau Blue Line LRT in the Twin Cities are also vying for federal dollars.

The FTA will first conduct a financial and risk assessment of the project. One potential complication involves its contingency fund, which is now 14 percent of the overall cost, or $238 million. If that doesn't pass muster with the FTA, the project's price tag could go up again.

In the meantime, the Met Council has applied for a $187 million "letter of no prejudice" from the FTA — county money authorized up front for summer construction that could serve as a local match to federal dollars once the federal grant goes through.

Such a letter doesn't guarantee full-bore funding from the federal government, but it is a sign that the FTA is leaning in that direction. The council hopes the loan will be awarded in July. There were nine such letters issued during building of the Green Line, which opened in 2014.

And then there's the issue of construction bids. Two firms submitted bids of $799 million and $812 million, higher than those thrown out last year because they were too costly and "unresponsive." The Met Council has until Aug. 1 to award the bid, but Southwest officials acknowledged Thursday the deadline may need to be extended.

"This project is just poorly managed" by the Met Council, said Commissioner Mike Opat, one of two commissioners opposed to the funding hike.

Commissioner Jeff Johnson, the second "no" vote, said Southwest won't relieve traffic congestion "in any meaningful way and it's a huge waste of constituents' money." The line would link downtown Minneapolis to Eden Prairie, with stops in St. Louis Park, Hopkins and Minnetonka. Service is slated to begin in 2023.

Commissioner Marion Green said the Met Council is "forcing the county's hand" and appears to be "playing a game of chicken with the federal government."

Even Commissioner Peter McLaughlin, a longtime transit advocate, said, "Delays are not our friend." But he said light-rail is an important cog in the Twin Cities' multimodal transportation network.

Other challenges facing the project include litigation and an application pending at the federal Surface Transportation Board related to agreements with railroads that share Southwest's corridors. Also, data from a new vibrations study have prompted residents at the Calhoun Isles condominium complex to call for a reroute of the project outside of the Kenilworth corridor. The complex is located within feet of a tunnel planned for light-rail trains.

Five people spoke at the board meeting, and all were opposed to the funding increase.

"Anyone who looks at this project with fresh eyes and an open mind can see this is not an effective use of taxpayer dollars," said Russell Palma, who lives at the Calhoun Isles complex. He characterized the public hearing as "window dressing for decisions that have already been made."

Janet Moore • 612-673-7752